This isn't the first time Fable III has been unofficially mentioned: British talk show host Jonathan Ross tweeted in March that he was approached to do voice work for the game. Of course, we've contacted Microsoft for confirmation of Fable III's development. We absolutely can't wait until the company pulls "we don't comment on rumor and speculation" on this one.
PS: From all of us at Joystiq: Congratulations to the happy couple!
Update: Microsoft's official statement: "We have nothing to announce regarding future Lionhead Studios projects."