I've been thinking the same thing.
Look at the modern smartphones. The lesson I take from iPhone and Android is that if you build a device that has a fair amount of memory, a modern processor, and an array of interesting sensors and input devices, developers will build for you amazing applications, killer apps even, in ways you're not able to imagine.
I imagine a next-gen xbox. It has kinect built in. Great APIs for that. It has Skype and Xbox Live and the various Windows Live services all built-in, with great API's for those, treating them as services.
You push the appstore model via xbox live on that device and I bet $10 that developers produce some amazing things for that platform. Perhaps even game changers. It revolutionizes computing in your living room the way that the iPhone revolutionzed computing in your pocket.
I also think... you'd have a very powerful remote control and connection ability to that device using every new Nokia phone (and any new phone on WP7).
Final thought along those lines is that WP7 is really a great mobile OS. I bought a new phone just last week. I'm on Sprint, so the HTC Arrive was available to me which is a new WP7 phone. I had to decide against it and went for an Android device but that was begrudgingly because there's no 4G WP7 phones in Sprint's line-up. (Ended up going Evo).
Here's the thing... WP7 just FEELS good to use. Way moreso than Android and also moreso than iOS. It's very snappy. It uses screen space well. And the Arrive has a GREAT physical keyboard, the best I've ever used on a phone.
No 4G killed it. Also, no removable SD card. And finally there was the Apps issue but they've put out some great dev tools for WP7. I think it's only a matter of time before they catch up.
Also I'm skeptical that the voice UI works as good as it does on Android.
Sorry for taking this slightly off topic but to bring it back around it's this: Microsoft could really do some great value-adds with Skype on a number of their platforms.