Supposedly, retailers are less supportive of the higher-priced Elite consoles during these craptacular economic times, because their consumer demand is lower than the Arcade and Pro. As a result, Microsoft may be limiting the console's sales to select retailers in North America and Europe and stop taking Elite orders in other territories sometime during Q2.
The rumored Elite phase-out would allow it to be marketed as a "limited edition" offering, giving MS the option to sell specially themed (and possibly higher priced) Elite bundles when triple-A titles need promotion. (Think the Resident Evil 5 Elite bundle.) Fudzilla also mentions that Microsoft wants to expand the 360's storage capabilities by releasing a standalone drive that's larger than the Elite's current 120GB model.