Mechner has not dabbled in video games since 2003's Prince of Persia: The Sands of Time. More recently, Mechner penned the screenplay for the movie adaptation of Sands, which stars Jake Gyllenhaal and is set for release in May 2010.
Due to the upcoming film--and the shared word of "Sands" in the titles--many internet sleuths are speculating that the new Prince of Persia game will be tied to the movie in some way. Niether Ubisoft or Mechner have officially commented on the purported project.
I hope his involvement gets the game's quality back up to what it was in Sands, I love that game to death.