Why? Convenience! Look, if people aren't going to be downloading next-generation titles directly onto their hard drives from Xbox Live from day one, will we cry about discs anyway? Further, if we're still buying those little silver platters with game data on them, why wouldn't we want to optimize our experience with them by having them installed? Of course, if games end up bloating in size just because they have a bigger disc to fill – the rumor is that Microsoft is trading up to 50GB dual-layer Blu-ray discs, which seems like an expensive upgrade if they're going to hardly use the optical drive – then we'll end up where we were in the glory days of PC gaming where playing a new game required deleting an old one. You can install games on the current Xbox 360 to varying benefit, but requiring the disc be in the tray at all times is one of the most irritating things about modern gaming. It's petty, I know. Will this also mean we'll have "CD keys" with each game? I don't know, but I could dig that, too.
I have no doubt we'll see lots more at E3 in June!
Source: VG Leaks via The Verge