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We do have an expansion planned for Diablo, I don't have any timeline to talk about. I think the most important thing for us always comes down to the quality of the expansion and the gameplay, so that will be a big factor in terms of driving our schedule.
GameSpy spells out some of our thoughts in more detail in this "what we want" article:
Obviously, something has to be done about the Real-Money Auction House. While I personally didn't go near it in the 70 hours I played Diablo 3 because I didn't want that influence in my game, I know that a lot of Diablo fans are bothered by its very presence. I don't expect Blizzard to kill it off entirely -- it's not something you just pull the plug on -- but perhaps adding an option to play with all auction houses completely disabled, along with appropriate tuning to make sure loot drops feel rewarding without it, would go a long way toward ditching the feeling that I'm having to exercise restraint as I play.
I also request -- nay, demand -- randomized level maps. I can't stress this one enough. By this point we've all gone through the same four acts of Diablo 3 enough times that we've got a pretty good idea of how long virtually any amount of campaign content Blizzard could possibly deliver can keep surprising and delighting us with the feeling of exploration, and it's not very long. I'd be fine with more linear story-driven levels as long as I also have the opportunity to leave that path and venture out on my own into randomized dungeons and zones.
For mechanics, I'd love to see Blizzard put the RPG back into Diablo by making at least some character-development decisions permanent. Either make me pick my final ability loadout when I get above level 60, or give me the option to do so by giving me an ability stat boost if I choose to lock in a power.
Finally, can we please have a better story with less cheesy dialog?