Someone mentioned earlier that it took 2 years to make Fallout 3. This is wrong, it actually took 4 years, and took longer than Oblivion. And you guys have to realize, Bethesda made Oblivion's DLC until 2007, and Fallout 3's DLC until 2009, so it's not like they haven't made anything for years and years. I personally believe it's likely that Bethesda started work on TES V after they finished Shivering Isles, but no earlier.
As for TES facing competition, well, I'm sure Bethesda isn't worried. Lets not kid ourselves, there are better RPGs out there, just look at Dragon Age and Mass Effect 1, but aside from a teeny-tiny number of poorly done imitators (Two Worlds, etc.), Bethesda is the only developer out there that makes RPGs with such massive, detailed worlds, and makes the actual game great. They don't have to worry about competition.