Just finished reading a paper by Gibbs, Liebermann and Hoffman in 2007, "Terminal Myeloid Differentiation is Uncoupled from Cell Cycle Arrest" (DOI:10.4161/cc.6.10.4258). I haven't read any further consequential studies, but I guess they will be very inspiring.
The murine cell line of M1 myeloid can differentiate into macrophage cells when induced with e. g. interleukin-6 (IL-6). During normal process of terminal differentiation, a coupling process of cell cycle arrest occurs.
As revealed in the study, if a proto-oncogene, c-myc, is manipulated to be overexpressed, the involved cell line will cease from differentiation and go on proliferating without cell cycle arrest. However if another gene, egr-1, is overexpressed meanwhile, the process of differentiation will be restored while cell cycle arrest is still banned by Myc.
The authors' conclusion about the role of Myc is that it banned differentiation "independent of " banning cell cycle arrest. Which could be illustrated as Figure 1.
Figure 1. The senario proposed by the authors.
In such a senario, the inhibition effects of Myc on differentiation and cycle arrest are independent from each other. Egr-1 can & can only prevent the inhibition on cell differentiation by Myc.
However, if we assume there is an inherent coupling between cell cycle arrest and differentiation, then either the left or the right one of the two red arrows in dashed lines should be true.
If the left is true, then we have Figure 2, which can also explain the results in the paper.
Figure 2. An alnernative senario.
In this senario, cell cycle arrest can inherently induce cell differentiation. Under normal condition, IL-6 induces the former and thus consequently induces the latter. Overexpression of Myc can inhibit the former and thus inhibit the latter. However, Egr can & can only restore the latter.
If the right red dashed arrow from Figure 1 is true, then no simple senari can be inferred to be compatible with the authors' results.
So at this moment it seems that in normal cell lines, it is more likely that cell cycle arrest can lead to cell differentiation, rather than that cell differentiation can lead to cell cycle arrest, provided that the two processes indeed occur with some inherent coupling mechanisms at all.