According to Kotaku, an internal Gamestop email has been sent out requesting that all stores take down current signs and promotional material for the Xbox 360 Core model, because once the current stock is sold out, there won't be any more. In other words, the Xbox 360 Core is being discontinued.
Why would MS be eliminating the Core model (other than the obvious fact that it's a horrible deal)? To replace it with a new rumored Core model named Xbox 360 Arcade, which will not include a hard drive, but will include a 256mb memory card, a wireless controller, and 5 Xbox Live Arcade games.
What do I think of this rumor? I say, it's about damn time they get rid of the Core. No one is buying it, and it just makes sense to get rid of it. However, I don't know that replacing it with another model is a good idea either because if people just want casual games, they'll go to Wii or DS, which is where most of the casual games are these days.