In an interview between XBLA's David Edery and GamesIndustry.biz, the 350 MB question was popped and received a "yeah".
Of course this isn't written in stone as Edery replies it's "a steady progress" but XBLA games could soon be breaking past their previous 250 MB limit.
"We've been listening to our partners, listening to our customers to try and get a feel for what's right," said Edery.
"We don't want the size limit to hit the roof because we think there's some value in promoting small pick and play experiences that don't cost USD 20 million, it's good for the ecosystem."
Clickfor the full interview between David Edery and GamesIndustry.biz.