It can, but not officially as far as I know. You can mod the XBox or buy a third party adapter to plug in a keyboard/mouse. Also, modding your XBox can get you banned from XBox live.
You mean you can't connect a keyboard to a USB port?! Wow! I would understand that game publishers would not invest money targeting keyboard users when there is no keyboard bundled, but not supporting keyboards and mice when it would make perfect sense to support them in addition to game controllers seems pretty dumb.
