Ep. 3 Article at SR.com said:
Xenosaga Episode III: Also Sprach Zarathustra (Thus Spoke Zarathustra) has some new details from Namco on this upcoming game. The character sheet will mostly be the same, with a few additions of Dimitri Yuriev, the URTV creator, Sellers, the U-TIC scientist as well as your favorite characters.
The setting will be envolving around Abel's Ark, which is in the old spot of Old Militia. The setting is best described by RPGFan's editor, Chris Winkler.
"Among the new locations the protagonists will venture to, is a strange splitter of land that has suddenly appeared in outer space. To investigate this strange floating structure, Yuri Mizrahi is sending Jr. and company. The floating structure however is guarded by an unknown E.S. To make things worse, when the party tries to reach the structure, it starts emitting a glowing light. Other dramatic scenes will take place aboard the Durandal, as Dimtri invades the ship and releases the Zohar emulators. Dimitri is apparently conspiring with his former colleague and current U-TIC scientist Sellers. Furthermore, judging from screenshots released today, Episode III will follow the example of its prequels in being heavy on flashbacks. The main means of transportation, the spaceship Elsa, has also been confirmed to return in Episode III. Its enlarged hangar now offers space for up to four E.S. units."
As far as the battle system goes, everyone will have new weapons (With the comeback of the Weapons Shops in the cities.) Also, from a few screens that has been released via the Trailer, All of the characters have new clothing as well in Episode III.
There's no official release date as of yet set for Episode III.