The main problem, says Rob Pardo, is one of control: console controllers just don't have the flexibility to do what Blizzard wants to do with their games. "If I were them," he told the press, "I'd be sitting around trying to figure out what's a cool new input device that supports all types of new kinds of games." And he also hinted that he might be trying to do just that -- Blizzard is apparently in talks with Microsoft, not to develop for this generation of consoles, but to help them advance to the next generation. This is a little more than just Diablo III on the Xbox 360 (though that's definitely a possibility) -- it's Blizzard possibly getting the chance to bring what they love about PC gaming to the next console generation.
Heady stuff. Blizzard doesn't need to do anything these days, of course -- if they want to take their next sequel and release it in, say, three separate parts, they can do that and it will likely still be a hit. But if they want to set their sights on innovating in the console space, we'll probably all benefit.