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I haven't really heard anything about this game until now. It's a survival horror game that takes place on an Island and is non-linear. It's being worked on by Techland (Call of Juarez, Warhound) and is due in 2008.  The following is some of it's artwork and a list of key features that Techland released to Team Xbox today:










KEY FEATURES:

  • Ultra-realistic combat
    • Intense and amazingly realistic hand-to-hand combat based on dynamic character moves and camera angles
    • Realistic physical reactions of opponents to hits
    • Exceptionally faithful and detailed damage model, showing damaged skin, muscles and even bones
    • Innovative system of targeting and hitting the opponents gives you precise control and a realistic combat feel
  • Advanced Artificial Life System
    • AL system allows you to take advantage of instinctive behaviors of groups and individual opponents
    • Living, breathing and dynamically changing ecosystem faced with the destructive influence of a spreading epidemic
    • Realistic and spontaneous NPC behavior
    • Through your actions, actively influence NPC reactions
  • Non-linear gameplay
    • Explore a vast, open world of a tropical island, on foot or in vehicles
    • Freedom of choosing your allies and completing tasks that bring you closer to the finale
    • Player decisions influence the way in which the game progresses, making it a multi-threaded story
  • Fully Interactive Environments
    • The ability to use all elements of the environment as weapons
    • A liquid, gas and electricity physics simulation system, which allows you to create your own unique ways of eliminating enemies  

Source:  http://news.teamxbox.com/xbox/14177/Dead-Island-Revealed/