Specifically, it sounds like you'll be able to bring your custom character from the original game straight into the sequel. It sounds like that, because director Casey Hudson said it!
"Any save game that you make from Mass Effect 1, you should be able to carry that same character into Mass Effect 2," noted Hudson.
Said Hudson of the anticipated sequel: "In the second game, you're actually going to go through a darker period where you're really looking for answers... there are a lot of twists and turns, and it's generally a much darker experience."
Hudson doesn't mention what platform(s) that feature will work on, but I'm surprised to hear it's going to happen at all. This news is in contrast to a conversation we had with some of the developers behind Saints Row 2 last year, who implied that there were inherent limitations in the way the Xbox 360 handles save files that prevented them from letting you do this with your original Saints Row character.
(They got around the problem with that delightfully ludicrous plot line about explosions, amnesia, plastic surgery, and gender reassignment. What a weird game.)
At any rate, you have to figure if Microsoft is going to make an exception on this issue for any game, Mass Effect 2 is a good candidate. The personal irony about this news for me is that I went with the stock male Commander Shepard all the way in the first game. He looked way more realistic than anything I could manage to come up with using the custom character tools. So I guess I'll be seeing ol' baldy again the second time around, either way!