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We generally develop independent of platform. It takes us about a month to move from our development environment to the specific environment of any given platform. This lets us keep our options open. As far as the target platform for Munch is concerned, all I can say is that the situation is still fluid, and I'm not privy to the latest details. In the meantime, development work on the game continues without delay, and isn't influenced by target platform considerations, nor will it be until we're very close to completion.
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-- Paul O'Connor
That's all I know, I'm afraid. I've yet to see where OWI specifically blame the disappointment of the game on moving system. They seem more intent on blaming telling us so much in the first place, which is silly, because you'd assume that if they told us what was planned to be in it, they could tell us what wouldn't, in fact, make it, instead of leaving it as a surprise to the very last moment - i.e. when we played the game.
In any case, we know they did actually start working on the PS2, because in retrospect they kept mentioning how difficult is was to work for. I doubt everything from Meetles to Mudflubs, cities to towers, controlable vehicles to interactive environments was excluded purely at the stage when they started devloping for Xbox.