According to a "high-ranking industry source" at developer Crytek, quoted by VideoGamer.com, it's likely that Microsoft will announced the Xbox 720 at E3 2012. The source also revealed that Crytek is already developing TimeSplitters 4 for the new console, and that it was even shown, behind-closed-doors, at E3 this year.
While we don't know any technical details on the unconfirmed, unannounced Microsoft console, according to VG.com's source, TimeSplitters 4 is being built on the CryEngine 3, and the assumption is the Xbox 720 will use Microsoft's DirectX 11, Microsoft's the most current software for PC gaming.
DirectX's features included tessellation shaders, multithreaded rendering, and compute shaders, all of which will add up to a level of detail never seen before on consoles.
The new TimeSplitters will reportedly focus on the series' branching paths and exploratory nature, "with sandbox-style gameplay elements a big priority. The current goal is for levels to feature multiple routes that lead to the same overall conclusion."
E3 2012 is long way away, but I don't think it's unreasonable to think Microsoft might use the show as the launch-pad for its next platform, which you have to figure they're working on (or at least planning!) already. According to Video Gamer, Microsoft's official announcement and launch will beat Sony's PlayStation 4 announcement, but a lot could happen in the next 12 months. We'll keep you posted as to what's going on with the new Xbox... if it exists.