Why do people want to bring their old characters back? It makes no sense for them to be the neravarine, champion of cyrodiil etc. It just doesn't :S
I didn't have the balls to come out and say that for fear of persecution, but yeah I totally agree. I like there to be some continuity with my characters from a RP perspective, but not the same person. I have actually made all of my character the posterity of ancillary characters from previous titles. For example, if I come across an NPC that I like, I make up a little back story and then whammo!, I'm playing as said NPC's son or nephew. Therefore i feel like my current character has some first or second hand knowledge of the events that preceded him, without having to actually be the same person.
Now back on topic. I would be surprised to see much in the way of new technology, even after 200 years. As it has been stated above, after the fall of a large empire there seems to be a backlash of ignorance and stagnation, both culturally and technologically. Almost like the world is in a state of shock and needs to recover. With regards to factions, I can't even begin to speculate beyond what has already been mentioned. Suffice it to say i HOPE there are many factions (a la Morrowind) that are all vying for a piece of the action. I want to see new factions rise from the ashes of the old ones, with small reminders of their roots sprinkled here and there.
One thing is for certain, there is room to mold the lore into a slightly new form . . . for better or worse.