heat and power supply issues acc'g macosrumors
And macosrumors has just posted that:
*The long-awaited Xserve update will not come for several more weeks (at least), due to the fact that current 1.42GHz G4 processors are too hot for use in a 1U rackmount environment and the Xserve RAID 2U unit continues to experience persistent supply and reliability issues that Apple will need more time to work out.
So, there are several competing rumors, none or all of which may be half-true! Interesting that software issues are not mentioned as I suspected perhaps that OS X Server may need some upgrades, tweaking, or optimizing to handle Xserve RAID throughput. That seems perhaps the most likely (though I like the idea of the firewire upgrade).