There's an elder scrolls novel coming out? That's either awesome or terrible news. I can't decide which. A good writer using the Morrowind setting could come up with something great - but a poor writer using the Oblivion setting might produce something unreadable.
The writers need to stick to lore - at least the lore prior to Oblivion, which entirely ignored most of the previous lore. The ES setting's pretty diverse and interesting as a whole, so as long as they don't try and make a LotR clone, it could be pretty good.
Wait - I found something on it:
The Elder Scrolls Novels Announced - Xbox
Greg Keyes is a solid writer, which is a good sign - it's not likely the usual awful game tie-in. The plot doesn't sound great, but it's impossible to tell without reading it. I also don't like the fact they only mention Tamriel - a continent as well as an empire. Which province it's set in defines the character of the novel. Each province is very different, and if the book ranges too widely over them, it won't get nearly enough depth into the world. Also this floating city couldn't possibly cover a significant area of Tamriel. But - the idea of a floating city does remind me of the ministry of truth and Moon's Spawn.
Anyway, I'd been thinking about the idea of an ES novel ever since playing Morrowind, and it's a great setting for one, as long as it's done right.