Current rumor of this moment around the XBox360 launch party is that Microsoft are planning on staging the event in a Californian desert, like Burning Man meets E3.
This should be an interesting event – if not only for the location, but for the logistics of staging an electronics event in an electronics unfriendly location such as a desert. My guess would be that it would be on one of the dry lake beds, similar to Burning Man, but even still, when the wind picks up theres plenty of dust blowing around.
From Kite Buggying (land sailing with kites) on dry lakes in Southern California, I can tell you that after a few hours on one of those lake beds, everything is covered in fine dust, and it gets everywhere. You’l be finding it in your XBox CD slot for days…