New information regarding Killer Instinct Classic has been released today. Siliconera had a chance to talk to game producer, Torin Retting, who said:
“Killer Instinct Classic is a complete port of the original Killer Instinct arcade game, and you can ONLY get it with the Ultra Edition of Killer Instinct. In fact it is a complete port of TWO versions of the Killer Instinct arcade game. It includes the original arcade ROM (v1.4) with all of the classic, fan-favorite glitches, and the revised version (v1.5D) that came out later to fix things like Cinder’s infinite combo. In addition to this we’ve added cool extras like a training mode, frame effects like scan lines to emulate a CRT and galleries of the original sprites.”
So Killer Instinct Classic will not be available standalone. You will need to purchase the Ultra Edition to get your hands on the arcade Killer Instinct.

So the rumors of KI1 and KI2 on xbla was bullshit!?!
*At launch.