According to 1up.com, God of War 3 is in development at Sony’s Santa Monica Studio and will be releasing this next holiday season.
Also mentioned was Epic’s Gears of War, and how the sequel may be finished to ship alongside God of War 3.
"…The folks at SCEA Santa Monica are already hard at work at preparing Kratos’ debut on PlayStation 3, which should arrive during the next holiday season, joined by a little something called Gears of War 2…" – 1up.com Staff
Even though Epic Games hasn’t officially confirmed Gears of War 2, gamers can expect a sequel with how well the first title sold and it’s climatic ending.
Stay tuned for more information.