OK, last time I checked, Sheng Long and Gouken aren't the same thing. But that isn't stopping a round of reports shouting "OH MAN SHENG LONG IS A CHARACTER IN STREET FIGHTER IV" from spreading like wildfire today. I finally got some time to read these stories and see what the heck was going on, and it sounds like Sheng Long is still a move, not a person.
I'll back up a bit. You know how Ryu says "you must defeat Sheng Long to stand a chance" as his post-fight quote in Street Fighter II? Well, that actually refers to his dragon punch. But EGM ran with it as an April Fool's joke ages ago and claimed that Sheng Long was a mystical hidden character in the game and detailed an outlandish method to see him. It was pretty funny.
This happened back when the Street Fighter storyline hadn't been fleshed out that much, so the jump from there to claiming that Sheng Long was the master of Ryu and Ken wasn't a huge leap. Capcom would later fill in a lot of the blanks in the series and add a bunch of extra characters and figures that would appear in anime, manga, game endings, and so on. Gouken was eventually created and inserted into the story in Street Fighter Alpha as the guy who trained Ryu and Ken. He's also Akuma's brother and serves as the good yin to Akuma's mad evil yang.
So it's Gouken, then, that has appeared in Street Fighter IV arcade machines in Japan, according to a report in Famitsu that 1up picked up. But Gouken doesn't translate to Sheng Long over here. SOTA Toys released a Gouken figure (pictured) in the States back in 2006 and kept his original name.
Oh, but hey, Sheng Long is totally in the game, though. Just select Ryu or Ken and hit F, D, DF plus any punch button to see it.