I was browsing through ign.com... then i came upon this
http://xbox360.ign.com/articles/681/681657p1.html)
it states:
January 17, 2006 - Obsidian Entertainment is currently working on three unannounced role-playing games, according to job listing site Creative Heads.
Comprised of former several Black Isle and BioWare creators, Obsidian appears to be expanding with work expressly for next-generation and PC platforms. One game, listed as a third-person action-RPG for Xbox 360 and PS3, is possibly the third in the Knights of the Old Republic series. Neither LucasArts nor Obsidian would confirm a renewal of their work done on Knights of the Old Republic: The Sith Lords. According to a source close to the development team, Obsidian may not have sealed the deal yet for KOTOR 3.