Borderlands Guide has an article describing the switch to cel-shaded graphics for Borderlands, based on new revelations about Gearbox Software's upcoming action game in an upcoming magazine article and an image purported to be from the game showing a new cartoony style (thanks Kotaku). A subsequent post on the Gearbox Software Community Forums confirms the change, and addresses potential concerns this may raise. Here's a bit:

Though there's always the chance some people could be turned off by the style, it was decided that, overall, it fits the game and creates a more visually interesting experience. Our concept art had this incredible, distinctive style and feel that fit so perfectly - the game has not become less detailed or washed out at all. Rather, it retains the detail and style that's often lost when we move from concept art to 3D. It stands out, and makes the gray-and-brown bleak landscapes, while still bleak and inhospitable, memorable and recognizable. The entire world has life to it, from the creatures to the very rocks and dirty walls. The game world is no less gritty, dirty, or harsh - all of the detail is there, and the environments have even more atmosphere. We solicited feedback from our focus testing initiative, which consists entirely of a very large pool of gamers from all walks of life, and in the end, the choice was clear for us.