From the latest Nintendo Power:

– Animated woodcut-esque cut-scenes
– Only looks like the opening scene is in prerendered 3D
– Shadow as Sir Lancelot, Knuckles as Sir Gawain, Amy Rose as Lady of the Lake
– Shadow and Knuckles playable in multiplayer Battle mode (need to defeat them in single-player Adventure mode first)
– Battle mode: Free-for-all deathmatch or work together to defeat a big enemy as quick as possible
– Impressions of multiplayer not too impressive right now

Link