According to The Mercury News' Dean Takahashi, having successfully unrolled the Falcon chipset in the Halo 3 Edition Xbox 360s, Microsoft is looking to further cut costs (and heat) from their console. The next project is codenamed "Jasper". And where the Falcon shrunk the Xbox CPU to 65nm, the Jasper will continue the shrinkage, miniaturising the graphics chip to 65nm to match. And memory chips will become smaller as well.
Takahashi also claims that Microsoft engineers feel like the heat problem is under control with both the recent Falcon's and older Zephyr's heat sink solutions, so buyers shouldn't beware when picking up new machines. While we're not waiting until the new chipset hits next August to buy a machine, we're not so certain the Microsoft has solved all their manufacturing issues just yet.