Diablo III takes place after an unnamed hero slain Diablo (Lord of Terror) and Baal (Lord of Destruction) in Diablo II: Lord of Destruction, in The Worldstone Chamber. Tyrael appears after Baal is dead, congratulating the player and opening a portal to Destruction's End, the conclusion of the game. In the end of the cinematic trailer, Tyrael threw his holy sword at the corrupted Worldstone and explodes. And that is where we see the Diablo III, that Diablo is back again. Hopefully in the upcoming Diablo III, we will be able to see Azmodan (Lord of Sin), and Belial (Lord of Lies) which are mentioned in the Diablo II, but their objectives are unknown.
In Diablo III, there is one confirm character that will be back is the Barbarian and a new character called the Witch Doctor will be part of the game too. One confirmed NPC to return is definitely Deckard Cain, who has been traveling the mortal realm to confirm evil has return once again. And we get to see a place called New Tristram and Caldeum.
Cauldeum was once the proudest city in all of Kehjistan, the trade capital of the entire world. Caldeum was never seen as the heart of the empire, even though it rivaled Viz-jun, and later Kurast, in size, and those who called Caldeum their home liked it that way. Even when the Mage Clan Wars erupted, the battles were never tolerated to affect trade in Caldeum, for while politics and magic may be important, trifling with trade is a serious matter.