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Right now there isn't a lot of information on the upcoming Episode II. But I did manage to get a little preview from the book "Skywalking":

The book claims that George Lucas has revealed that "there will be a major aquatic battle scene at the end of Episode II that will function as a cliffhanger... and is intended to make the water sequences in Jaws and Waterworld pale by comparison. This battle represents the pivotal defeat of the Jedi Knights at the hands of the Empire's amphibious stormtroopers. An old Lucas quote referenced earlier in the book may seem to lend credence to this rumor: "No one's ever seen a truly terrific and epic water environment [on] film because of the previous limits of special effects technology." However, it could be easily said that Phantom Menace's underwater sequences are what Lucas was talking about there.

The tome suggests that the Emperor will come into the possession of a powerful artifact (a la the Kiber Crystal in early Star Wars drafts) that "makes him the most powerful user of the Force in the universe."

The book repeats rumors of a "torrid" love triangle between Obi-Wan, Anakin and Amidala that has an "enormous impact" on the course of the saga.

"George had Boba Fett and Vader being brothers in the prequels, but he thought that would be too hokey."

Obi-Wan Kenobi may face temptation to turn to the dark side during the Clone Wars, possibly with another Jedi nudging him towards the dark path.

Here is a list of rumors

1. Obi-Wan will be cloned but the result will be Owen Lars, Obi-Wan's 'brother'.
2. The Mandalorian Army will be the main threat in the film.
3. Episode II will kind of like a romance movie (but with a lot of cool starfights!!!)
4. If you were too dumb to notice-Darth Sidious is Chancellor Palpatine who will begin to enforce the Laws of the New Order in this film.
5. The planets in this next film will be Naboo, Coruscant, Correlia, and Chewbacca's home planet.
6. X-wings will be introduced as will the first Star Destroyer. The Empire will be born before the end of the film.
7. Boba Fett will appear to be a 'good guy' bounty hunter this film - almost like Lando, he starts out a a good friend of Obi-Wan's from youth, though he's really being paid off by Palpatine to fetch Anakin when he reaches a certain point in his training.
8. Anakin will marry the Queen near the end of the film, though she'll be miserable from the news of the rise of the Empire and her dislike towards the Naboo Senator Tarkin.
9. Obi-Wan and Boba Fett are both from Correlia like Han Solo- which is why Obi-Wan smiles a lot at Han's comments on the Falcon in ANH. Boba Fett's own feelings about the Force in this film will be a lot like Han's were when he meets his pal Obi-Wan after several years of not seeing him.
10. Lots of variations of Millenium Falcons in this film.
 
According to Rick McCallum the producer of Star Wars, he appears to be saying that Darth Sidious will be the same person as Chancellor Palpatine.

Here is a chat transcript with Rick McCallum:

ASKLucasfilm: Jedi-monkeyboy says: As much as you can, what info is there on the next movie?

RickMcCallum: I can't give you any information, other than the fact that I think the story George has is fantastic, complicated, and dangerous!

ASKLucasfilm: ltnfire1 says: Are you both going to work on the next film?

RickMcCallum: Yes, we are. We have started work on Episode II, and we will start shooting in June of 2000

ASKLucasfilm: Jedi-Liana says: The current rumor is Leo DeCaprio plays Anakin in Episode II. Please help confirm or deny it...thanks!

RickMcCallum: Both George and I love Leo's work, but we haven't even begun casting yet for Episode II, and won't until September or October.

ASKLucasfilm: Dmx796 says: When does the newest "Star Wars" come out?

RickMcCallum: Episode II will come out in summer of 2002.

ASKLucasfilm: Jedi-JJBinks says: Mr. McCallum, as you know, Darth Maul is an extremely popular character. Any chance we may see him again?

RickMcCallum: Not likely. But remember, (speaking sinisterly) the Dark Side has lots of characters.

ASKLucasfilm: Jedi-JJBinks says: Mr. McCallum, how far along is Mr. Lucas in his script for Episode II?

RickMcCallum: He started, but he's not far enough. But I'm hoping it will be finished by September.

ASKLucasfilm: SpiderCCC says: should we expect to see more female Jedi in future films?

RickMcCallum: Good question. Good idea. Perhaps. I hope so. Maybe. Wait and see.

ASKLucasfilm: Jedi-JJBinks says: Mr. McCallum, can we look forward to seeing such supporting actors as Hugh Quarshie (Captain Panaka) and Pernella August (Shmi Skywalker) in Episode II?

RickMcCallum: Hopefully, yes. P.S.- didn't you think Pernella was great?

ASKLucasfilm: Jedi-Korben says: Have you been given the story plotline by George for the next two movies?

Kevin: Nope, we haven't. A lot of people haven't yet. It's still a work in progress, and not done until September, so no one knows yet.