Citizen Zero has been around for quite a while as well. I think the first news about this game appeared in 2002. I'd assume that Microsoft hasn't put as much money in the game as they did with TFLO or Psychonauts.
The XBox is truly lacking in the RPG genre, and to see the cancellation of what a potentially good RPG that was being developed by a major-name developer as well as having Live! support, is quite disappointing to me.
Edit - I totally forgot about Vanguard ( http://www.vanguardsoh.com/
) Although not a console RPG, it wouldn't surprise me if this was where Microsoft was concentrating its MMORPG efforts right now.