I really liked Hopeless Masquerade so I'm pretty excited for this game to come out. The graphics in HM are really pretty and it's really a step up from the earlier fighters. I liked the customization in it more than in SWR or 12.3 because of the Shinto/Buddhism/Taoism thing, since that added variety to the normal moves on top of the special moves, and I had a lot of fun changing the religion on each character to see what was different and how that would affect combos. I'm doubting that something like that will make a return due to the theme of ULiL being different, but the "using different urban legends" thing might prove to be interesting for customization.
I guess one of my biggest complaints with HM would be that it's easy to get bored with it after a while: the character roster felt limited, the AI was poor, and the netplay was iffy, so it was hard to play with others and it would get boring simply playing on your own. Of course, those are all obvious improvements to look for in ULiL: more characters are going to be added, and the AI and netplay will (hopefully) be better. The one thing I really want in ULiL is an arcade mode, since HM didn't have that. There's a surprising world of difference between beating everyone up one after another without interruptions and having to select a character in VS CPU mode between each battle.
I'm wondering if, as a sequel to HM, ULiL is just a sequel in spirit (same engine, similar gameplay) or if it's going to be a legit sequel in story, too, with HM somehow being the cause of the events in ULiL. Either way, I'm hoping that the entire HM character roster returns, and if it follows the same pattern as SWR, it'll have 3 existing characters and 2 new characters. The only one I'd really like to see again is Sanae, since in WaHH it was mentioned that she was getting restless after not taking part in HM/DDC, so it wouldn't be unnatural if she showed up now. No clue on the others.