Take it with a roomful of salt, but half of the internet has exploded with speculation this morning following a wholly-unsubstantiated rumour from "a source" at gaming website VG247 that Legacy of Kain: Soul Reaver will soon be receiving a reboot from Crystal Dynamics, replete with new art direction. No mention of returning characters, status in the series continuity, or anything specific at all.
We should probably take the time to recall an apparently-forgotten murmur which emerged about a year ago, when a guy named daverabbit reported something similar. Despite a few other hints which cropped up at the same time to substantiate the idea that a game would be announced at E3 2011, nothing happened and nothing was announced.
Contrary to this new, unknown source's claim, Crystal Dynamics officially stated in mid-2011, without equivocation, that they are not working on a Legacy of Kain game, and all evidence suggests that although they are indeed producing something beyond their current Tomb Raider reboot, that something is a brand-new intellectual property.
Apart from that, if the rumour is somehow true, there are also the oft-reiterated caveats that neither series director/writer/mastermind Amy Hennig (or, for that matter, any members of the original teams responsible for the games, with the possible exception of designer Riley Cooper), who is working at Naughty Dog, nor pivotal voice actor Tony Jay, who died in 2006, can return to lend their talents to a new entry in the series.
Reboots are the hip new trend in the gaming and movie industries; as Wikipedia puts it, "effectively, the writer(s) declare all established fictive history to be irrelevant to the new storyline, and start the series over as if brand-new". Sometimes it is possible to reach a fairly elegant compromise in which the rebooted continuity is directly connected to the old, and heavily based on its events (e.g. in the case of J.J. Abrams' Star Trek from 2009).
Although it is very strange from an in-universe point of view that a developer might putatively choose to reboot the series here instead of starting with the original Blood Omen: Legacy of Kain, it's no secret that Soul Reaver was the most popular game of the series and its real breakout title; it was the best-selling and most mechanically-innovative Legacy of Kain game, at 1.5 million copies shipped, and remains firmly ingrained in gaming's public consciousness, to the point that you will frequently see gamers on forums calling this the "Soul Reaver series", and wondering where Soul Reaver 3 is.
Though gamers also sometimes vaguely express that the whole storyline ended with Legacy of Kain: Defiance, Crystal Dynamics had definitively planned at least one further game to bring the arc of Kain and the restoration of the Pillars of Nosgoth to an end. which unfortunately was never produced. Although Defiance certainly ended Raziel's story, countless loose story threads, both minor and major, are left hanging by the fifth game's conclusion.
Obviously, as a wiki admin dedicated to making the complex story of the series more accessible, I would be disappointed to see a developer lazily and unappreciatively copping out by throwing the series' expertly-crafted mythology into the bin and starting anew with Soul Reaver for the sake of big bucks, particularly so considering that Legacy of Kain is commonly regarded as having a story of great artistic merit, among the best in the history of video gaming. Direct sequels after a dormant period are not necessarily doomed to be unsuccessful; just look at the Doctor Who franchise. Defiance's ending is, perhaps deliberately, sufficiently wide open that a direct sequel starring Kain may as well be a reboot with very few ties to the other games if its developer so wishes, while still staying within one continuity. Here are two posts by Divine Shadow and ChocolateRob which express my own view perfectly. See also this thread.
I believe a full-blown scrappage of continuity could do as much harm to the series as good. On the other hand, to some extent you have to take what you can get, and given the fact that reboots and revisions to the established timeline are actually an active part of the canon of the series (see Soul Reaver 2), it is technically not even possible to start a new continuity without it being connected to the old. I am not closed to the idea of a reboot, as long as the characters, world and tropes which have made the series as excellent as it is are passionately respected and not lost in the reshuffle (*cough*DmC*cough*).