According to an interview with Microsoft Xbox director Aaron Greenberg, the Milo tech demo "continues to exist," but it's not a game that they intend to bring to market.  I don't know how this is supposed to jive with the usual hyperbolic tripe that Molyneux loves to force feed us.  Last I heard, he sounded pretty convinced that it was a game that would blow our faces off.

I hear Molyneux keeps the real Milo in his basement.

good it was stupid AND creepy

I wouldn't call it a "game."

" I hear Molyneux keeps the real Milo in his basement. "

Can't say I'm surprised by this.  It seems like the kind of thing they would use to experiment and grow their understanding and technology, but never turn into a full fledged game.

I'm still thoroughly confused as to why people want to talk to a virtual boy. There's nothing that says "Don't judge me" like a 23 year old male sitting in his basement talking a fake 12 year old boy discussing your daily life and horribly drawn art collection.

Didn't you hear?  Skittles killed and ate Milo.

Did you really expect them too?  I doubt most of that was real and just things they wish they could do and to excite everybody.  

" Can't say I'm surprised by this.  It seems like the kind of thing they would use to experiment and grow their understanding and technology, but never turn into a full fledged game. "

Aaron Greenberg just partially redacted his previous statement on his Twitter Account:

  Project Milo absolutely continues in development at Lionhead Studios, it is just not a product we plan to bring to market this holiday

Someone needs to take care of Peter Molyneux's shiny balls...