I thought one of the major selling points for Live Arcade was classic Arcade games? XBOX does old stand-ups arcade games and Nintendo does the old console games. Why would you move away from doing something that instead of moving to box a competitor out entirely? Seems like a silly move to me.
If they want to get more original or revamped titles on Live Arcade, that's fine. Switch up marketing strategies or something. But don't cut back on faithful arcade ports!