Lionhead's community pet Sam van Tilburgh posted an update about Fable 2 on the their website. He talks about all the meetings that are taking place between them and Microsoft and what they're discussing. He's also talking about some technical stuff and he even mentions something about nipples!
There's nothing new about the storyline that we didn't know already. It takes place approximately 500 years after The Lost Chapters in the same world, Albion. Van Tilburgh also mentions the setting of the game, many gamers seemed to like merry ol' England with its organic feeling. Fable 2 its world will retain this same feeling and it'll be even bigger than before.