From IGN:

Graphics are very very meh, but I'm sure gameplay and freedom will cover that up nicely :)

I love the first fable and lost chapters (which is basically what the first fable should have been) so I am getting this first day. I saw the video where they explain co-op and all the good memories of playing fable returned. Can't wait.

Yeah, this game looks excellent:

 I think the graphics are excellent.  The character models need a little work, but the environments and the lighting look like they are as good or better than any other console game thats already been released.

Very sexy.

The video explaining co-op had the farm/windmill area shown in one of those pictures in it and it looked stunning. I'm surprised at how much better the game looks since the last time they showed it (E3 07?).

 That makes me want to....

Damn, I've been leaning more and more towards getting a 360 instead of a PS3, I'll eventually get both. Then, first, I remembered Too Human. Now I'm reminded of Fable 2. The decision is getting tougher.

Graphics aren't bad.

Character models look a bit odd (some jaggies and poor texturing.)

Scenery and background look nice, some good lighting and shadow effects.

I'm glad they kept a similar appearance to the first game. However, it's interesting to note, that much like Halo 3, (Microsoft's other big franchise) they haven't tried to push the graphics too far beyond that of it's predecessor. Perhaps they were told to focus more on the gameplay, and to keep things simple.

If I ever get a 360, this will be on my wish list.