I know a lot of games have been doing this recently (Mass Effect), but does Fable 3 have any such features? Just wondering if I should boot Fable 2 up and finish some things before playing Fable 3.
Peter Molyneux has said that the only change you'll notice is the things other people say to you. Nothing major.
A complete description of the relationship can be found on the Lionhead forums. Note this comment about how NPC speech is affected:
Fable III will read your save file of II, NPC's will talk about your end game decisions
When you load Fable 3, the game will check to see whether you have a Fable 2 save. If you have multiple save file in Fable 2, it will read the latest saved file.
As mentioned by Edootjuh, the NPC's will say about your end game decisions. When starting on Fable 3, it will also use the gender of your hero in Fable, when talking about your parents ("Your Father/Mother would have been proud").
Exactly what the others said, but also when you open the demon door "retirement" room one of the demon doors mentions how your mother/father went to great lengths to open them, the demon door is the one from Brightwood in FableII