they had a report at shenmuedojo.com that stated the makers of the Shenmue series had actually made all the levels, characters, uncompressed textures, story elements and so on for all 3 shenmues, it was just a matter of porting it to a specific system, and they were leaning towards the 360. Since then, nothing has come up, accept the developers stating they've been moving onto other projects. I find that really stupid though. If they all ready put all that work into making everything, why not just go the extra step and port the damn thing? Might as well try and make back some of the profits they spent to create the game.
Also, they said if they port it, they'll port it as one HUGE game, so instead of Shenmue 1, Shenmue 2, and then a Shenmue 3, they'll realease all of the games on one disc, as one huge continuous story. If they revamp the textures and everything to next gen quality, and work on their voice acting, this new game could be the biggest roleplaying game since Mass Effect.
Hear's hoping they finally get their acts together and make the game, or at the very least, sell all the material to someone else who will finish it for them!