From Joystiq:
http://www.joystiq.com/2009/02/25/quake-3-arena-for-xbla-is-very-close-to-being-finished/

Quote: "id's John Carmack assures us that Pi Studios – developers behind the Xbox Live Arcade release of classic multiplayer shooter Quake 3 Arena – is "actually very close to finishing that up." He didn't identify any specific reasons for the delay, but said that the developer had "different things come up at different times" like having to "shift people onto different projects."