Update 2: PC World UK is claiming that Bennett from Microsoft really did say, and they quote, "There will be a new HD DVD drive next year, but it's not finalised yet." Another writer at ComputerActive, the UK's largest computer magazine, corroborates the story. This means either Bennett is mistaken, or someone else at Microsoft is mistaken, but Microsoft is denying that a new drive is coming at all. We believe PC World UK, and we believe that there's no drive coming, so this just seems like a mistake.
[UPDATED: Rumor Smashed] PC World UK is reporting that Microsoft has plans for an updated HD DVD drive for the Xbox 360 launching some time in 2008. Toning down the noise of the drive from jet engine levels to more respectabe leafblower levels would be nice. [PCWorld UK]