EA had this to say via their site:

Adding a fantasy/Medieval vibe is a perfect next step for this franchise. EA has enjoyed enormous success with The Sims as well it’s numerous expansion, successors, and stuff packs.  Despite complaints of archaic DRM by it’s customers - The Sims’ sales still have been nothing short of record breaking, and this expansion undoubtedly will experience the same success.  Adding an RPG element to the game could bring in a demographic of gamers that have not played The Sims in the past, expanding on it’s already enormous player base.

The Sims Medieval offers players a chance to build up a medieval kingdom, controlling characters from all walks of life, from Kings and Queens, to Knights and Wizards, Blacksmiths and Bards. It provides a host of storytelling possibilities in the form of quests, from crafting a legendary sword to arranging a royal wedding, to protecting the kingdom from an evil sorcerer, to finding the fountain of youth. Every quest plays out differently depending on which Hero Sim the player is controlling.

Players can choose to customize every new Hero that comes to the kingdom, including selecting their traits and their fatal flaw. Players get close to their characters, not only sending them on epic quests, but also making sure they carry out their daily responsibilities such as healing the sick, trading for exotic goods, or forging armour - what happens to their Sims is up to the player. The time of romance and chivalry is back with The Sims Medieval. More details can be found at http://www.thesimsmedieval.com. Out Spring 2011.

Scott Evans, General Manager of The Sims Studio at EA had this to say:

Get Medieval with The Sims 3: The Medieval in Spring 2011, for PC and Mac platforms.

Source: The Sims 3, EA