Wow where do people like this come from - this guy should have to donate $100 to the site for posting something SO WRONG as if he knows what he's talking about.
The Diablo 3 Team is currently working at Blizzard HQ - a couple of them were moved up when Blizzard North was closed, most of them were hired last year, only 1 of them worked on a previous Diablo release (and that was the D2 expansion). D3 will be a sequel to D2 and will be implemented in the same fashion but with MUCH improved graphics (still 3rd person) - think NWN2 vs NWN level. The need for improved oversight of D3 was part of the reason for the B-North closure. D3 will NOT be an MMO but will allow for Battle.net multiplayer a la previous versions. An MMO Diablo (which I would love to see) is off the table right now because Blizzard feels like to a large extent they would be hiring a new development team to compete with themselves (WOW). Expect the official announcement this May - possibly in an exclusive PC Gamer issue (this is still being negotiated). Don't expect a 2006 release however as some sites are posting (e.g.
http://pc.gamespy.com/pc/diablo-iii/ ). X-mas 2006/7 to Q2 2007 is what I've been hearing.
Now as far as plot this is RUMOR - I heard that the premise is that there is a new leader of Hell and also a "turncoat" ArchAngel (which may be the same - I dont know) and the result has been an invasion of Heaven by the minions of evil. Once heaven falls - mortal Earth will be easy prey, yada yada yada .... again RUMOR.
For those that will call "BS" like the guy quoted above:
This account was largely correct (note we do share a source):
http://www.kotaku.com/gaming/diablo-3/diablo-3-trashed-116290.php
Also check Blizzard's employee list - you'll find a whole team including former Bliz-North peeps and the new hires from last year which are not assigned to any know project (hmm). Also, a couple musicians from Czech Republic have posted recently about being contracted to do recordings for Blizzard for the Diablo III score - I cant vouch for the authenticity of these claims but they match a location used to record the DII expansion soundtrack.
Finally, ask around the gaming community - obviously Blizzards' employees are under a nasty NDA but ask about D3 and you may get a smile, nod, or after a few dozen beers a little more concrete information.
I'm excited - I was never a huge Warcraft fan but I loved Diablo like so many others and would love to see a modern installment ... and an MMO but I said that already....