http://www.joystiq.com/2007/08/21/2k-games-announces-mafia-ii/

"2K Games has announced that it will be publishing Mafia 2, sequel to 2002's organized crime sim, Mafia: The City of Lost Heaven. Developed by Illusion Softworks for "next generation consoles" and Games for Windows, the game faces unbelievably steep and varied competition as it vies to be "the industry's most compelling Mafia title to date." It also promises to deliver "high octane gunplay with white knuckle driving and an engaging narrative," though we're not sure why you'd be driving a giant white hand or getting married in the course of the story. But hey, they had us at the high octane gunplay bit.

As evidenced by the initial batch of screenshots, the 1940s tale of fine suits and illegal activities hopes to be just as cinematic as a Hollywood film -- preferably one involving mobsters and godfathers. If those offer any guidance, however, it may be wise to cancel any plans for Mafia 3."

It all makes sense lol. Lot of similarities between this and bioshock. A good bleed over project to make use of some of the tools they built on the UT3 engine and probably a good foundation on the concept art side of things and research into period information. Should be a completely different product when its done but definitely a smart move for 2k games.