Peter Moore recently announced that backwards compatibility was not a major concern of the 360 team at this time and that "not every XBOX game will be backwards compatible". This of course goes back on their original promise.

The state of backwards compatibility is such that Barbie: Horse Adventure is supported but games like Morrowind, Midtown Madness 3, Panzer Dragoon, Shenmue 2, and a slew of other more popular titles are not supported. When asked why this had happened, they claimed that games like Barbie showed up because they shared a game engine with another game they ported.

Sounds to me like they are just making excuses. Bottom line...backwards compatibility was an advertised feature, and if they were to discontinue that aspect of the system, it would show a bit about how well they keep their promises. If you think this is bullshit, please point your browsers to the http://www.xbox.com website and tell them how you feel.