Well, it certainly wouldn't catch on fire and/or be overly noisy anymore, would it?
Michael: Jodie, how's my schedule look for today? Jodie: You've got a conference and dinner party at the Japanese Embassy regarding wildlife protection. Michael: Oh, yeah...sorry, but I'll have to cancel that. I'm heading out to save America!
The overheating problem of the 360 was actually a conspiracy on the part of MS to get people to create more efficient and space saving cooling methods for them. They didn't want to just come out and ask people or put up prizes or something because that's open source territory right there.
So yeah, I would bet that upcoming 360s will have watercooling built in.