The Xbox 720 will be released in October! Along with Sony's PS4 console!
Before or on October 29th, as there is a confirmed game release of Assasain's Creed 4: Black Flag on October 29th.
New Xbox 720 Games will cost $70 (USD)
The LED's on the console may be blue (As shown in this image)
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The codename for Microsoft's next generation console is "Durango", however it has previously been referred to as "Loop".

IllumiRoom:
The Xbox 720 is rumored to use new technology made by Microsoft that is called "IllumiRoom" which uses a new Kinect Sensor that will project imagery from the game that is being played into the room it is being played in to create a more realistic feel when gaming. (A new Kinect sensor will be released, so don't think that your current sensor will be gaining new abilities to project imagery)
IllumiRoom looks pretty cool, it seems like it will greatly add to the gaming experience. Check it out here:


GPU:
There is rumored to be 2 GPU in the Xbox 720, this is a HUGE deal because each one of the GPU will run independently of the other, which will allow for multitasking on the console. If you want to leave a match of Zombies running while you go play multiplayer in another game that may be possible!!

Graphics:
AMD 7000 Graphics card.

Hard Drive:
The hard drive size for the Xbox 720 will start at 500GB and go up from there, that is much larger than the hard drives for the Xbox 360, but that is because all games will be required to be installed to hard drive.

CPU:
A 16-Core CPU (Pretty nice, yeah?)

More to do with the Kinect?, YES:
Microsoft has filed for patents for projecting 3D imagery that revolves around the game you are playing onto the walls of the room you are in, this project has been codenamed "Fortaleza" and it may require wearing special 3D glasses to enjoy its benefits. (Obviously it won't be necessary to play in 3D, it will just be an added benefit for those who would like to use it).

Blu-Ray:
The Xbox 720 may pack a Blu-Ray disc drive, which would allow not only for playing Blu-Ray movies on your Xbox 720, but it would also allow games to be much larger (Because Blu-Ray discs can hold much more information that DVDs)

Although no release date has been announced for the Xbox 720, it is likely going to be available for purchase before the holidays of 2013. Let's face it, would the Microsoft we know miss out on the biggest time of year for sales? Nope.

No price has yet been released for the Xbox 720, however it will likely cost more than the current Xbox 360 due to its added technology.

According to many sources, the Xbox 720 will block the use of used games, which would greatly impact companies such as GameStop, however this has not been confirmed and hopefully is not the case!
Of course new games will be coming out for the new console, here are some of the games that are thought to be coming out for the console (hopefully soon after its release).

-A new Call of Duty game (Possibly Modern Warfare 4)
Infinity Ward has been looking for a new Senior Animator ... Maybe that will lead to some changes in the graphics of CoD.

-A new game from Bethesda Studios
Possibly another game in the Elder Scrolls series, especially after the great success that Skyrim had

-A new Sonic game
That's right, our little Hedgehog friend will be making a comeback on the Xbox 720. However he will be keeping similar graphics to titles that are currently available on the Xbox 360.