The following is taken from the Team17 messageboards when they responded to be questioned on the possibility of a version of Worms appering appearing on Live Arcade
“[i]Actually, MS did contact us about this last year and there have been forward moving discussions. We do see it as a pivotal and perhaps ideal place for the series to land, a view shared by various XB360 Live Arcade planning folks.
However, for one reason and another (to be honest, mainly our obligations with PSP/DS) the development didn’t happen (actually we were on the XBLA dev list around E3 time) but now that we’ve experienced just how awesome XB Live is on 360, we’ve resurrected the conversations. I wouldn’t expect it anytime shortly (and it won’t be a quick port of Armageddon etc) but it is on the agenda.
Also, if it did make it, it’d be a 2D version with a lot of downloadable content – which is something Live Arcade is very cool about.[/i]”
Whatever happens it look like we are in for one hell of a long wait.