Final Fantasy VII: Advent Children is the official name of a DVD that will be released by Square-Enix, presumably sometime in 2004. However, it seems most likely that it will in fact be a movie, because no standard RPG elements have been shown or discussed by Square.
It is currently unknown whether this product will be a full-fledged videogame or a simple movie, but from the screenshots and trailers that have been released, it is known that Advent Children will feature some very high-quality CG animation.
Scenes from the trailer highlight an epic sword fight between Cloud and Sephiroth. There are also scenes of Cloud walking through a church, with beautifully rendered stained glass, and an ominous scene featuring Sephiroth standing, surrounded by flame.
The official website (http://www.square-enix.co.jp/dvd/ff7ac/) is only available in Japanese, so I am personally unable to understand the content. However, a paraphrase from (http://www.rpgfan.com/news/2003/2267.html) reads:
It was revealed that after two years of peace, the Northern Crater, where Cloud and his friends defeated Sephiroth in Final Fantasy VII, is showing abnormalities. This coincides with the occurrence of an illness, called "Planet Scar Syndrome" which effects the entire world. All of the sudden three men appear in front of Cloud. And among them he sees the remnants of his old nemesis, Sephiroth.
In some ways, Advent Children is a double sequel. Not only does it follow the events of Final Fantasy VII, it also Square's second foray into the full-length film (probably) industry. Final Fantasy: The Spirits Within was the first, and only received mixed reviews. Because of this, the wisdom of producing a second motion picture has been questioned. However, it has also been said that any sequel to FF7, possibly the most successful and well-known RPG of all time, is sure to succeed. Only time will tell.