Fable 2 improves on almost every aspect of Fable 1. Environments are very distinguishable. If someone placed me in a random area, with a quick look around I would be able to tell them almost exactly where I am. Real estate has taken a more active role, as you're now able to buy any building in the game without killing the occupants. Humour finds its way into interesting characters, item descriptions, and loading screens. Professional actors like Ron Glass (Firefly), Julia Sawalha (Ab Fab), Zoe Wanamaker (My Family) and Stephen Fry (Blackadder) voice main characters. Your actions have a very noticeable effect on civilization, you can be either gender, be gay, have kids, get a job, have perverted bedroom parties, buy clothes, turn your body into an artistic statement, the list goes on.
Oh but Fable 2 has it's flaws, boy does it have flaws. There are so many reported game ending bugs which wouldn't necessarily be bad if you weren't stuck with one save file per hero. The genius of the one save file system is to make you live with the consequences of your actions and consider each choice carefully, but unfortunately they can be destroyed/corrupted easily, forcing you to start all over again. Interested gamers may want to wait for a patch, perhaps grab Fable 2 for Christmas?
Other complaints include a lack of quality items behind demon doors, a co-op system which places one person in the role of a generic henchmen (though you're able to link the henchmen to a hero save and earn gold/experience) and an anti-climactic ending giving you three choices which practically make no difference.
One more thing. You wouldn't believe how many complaints I've seen from fans who purposely cheated/exploited their way through. Fable 2 is longer than it's predecessor, but if you blitz through for hours at a time or take a shortcut, if from the moment you put the disc in, your sole concern is getting to the end, then all you'll get is a hollow gaming experience.