So they've said that your character from ME1 can carry over, but is there any way to change them in the new game, if by the end of the first you decided there was something you didn't like about them? Can you turn them into a different class or alter their appearance, or do you just have to start all over? 
 
They also say your choices from the first affect this one as well (  SPOILER WARNING: Click here to reveal hidden content.) If you don't use your old person, does that mean you can set up what choices your new guy made (like with the background option in the first)? Or do new characters just get a set universe to play in?

Your spoiler warning failed.

From what I've read on the Bioware forums, everything you did in ME1 is set in stone.  You can go back and do a second playthrough with your same character, and have that playthrough's decisions transfer to ME2, but you cannot "flip a switch" and redo any of your choices.
 
If you choose to not carry over your save, you will create a new character.  During the character creation, the game will ask you questions about your character's past (just like in ME1, although I'm sure it will be more in-depth this time around), and those answers will auto-select the major choices in the first game for you.  
 
For example (ME1 spoilers ahead):

If it is like on the PC - for each playthrough there'll be a 'character' save that basically contains the information of your character and it's choices.
Say for example you start a new game now and decide to play with a previous character - you'll get an oversight of all your playthroughs.

The only problem I had with it is that it's hard to choose which one as the choices aren't displayed on screen (at least not in ME1) so I'm left guessing which character I want to play.
Thankfully I play on the PC and just cut+paste the character saves into a back-up folder, so I'll have the perfect playthrough setup for the release of ME2.

EDIT: For those of you interested the folder on my machine was found in C:\Users\[username]\Documents\BioWare\Mass Effect\Save