Okay for the many people who have discussed this topic on many many different forums since the games Alpha and Beta releases and etc. I think that I will attempt to settle this matter once and for all.... (not to boast) sense I have a pretty good well rounded memory that retains nearly everything. (I suggest reading everything before you post/remark *please*)
So first thing is first. Is the storyline in Diablo 3 fractured from the previous two games story arc? I would have to say that it is. And in order to prove this I am going to do a recap of all the games and make a detailed list of the things in Diablo 3 that contradict the previous games. The recap is just to help let people know.
1) Diablo/ Diablo + Hellfire
Okay this game centered around the idea that King Leoric had gone insane from Diablo's twisted presence through Lazarus. Which resulted in his timely death and his son being possessed by Diablo. In this game Cain is warning the player that at the end of the entire mess; if he succeed. He/She must destroy the soulstone that holds the soul of Diablo. For by doing this it will banish Diablo back to the black abyss forever. We all know that the "Warrior" who defeated Diablo changes his mind and jams the soulstone into his own head believing Diablo could be controlled by his own will. This action lead to the events of Diablo 2 and Diablo 2 Lord of Destruction.
2) Diablo 2/ Diablo 2 Lord of Destruction
This game beginning with the dark wanderer (A.K.A. "The Warrior" from the last game) destroying Tristram and finally giving somewhat into the control of Diablo. We find out many thing throughout this game about the Soulstones and the plan to corrupt the World Stone at Mt Arriat in the Barbarian highlands of the north. during the way we find out that the prime evils and the lesser evils can not officially be killed. (which is confirmed in a cinematic trailer with the archangels vs the demons in Diablo 3 when Diablo says he can not be killed and will eventually resurface). That they are in fact "upon death" sent to the black abyss to wait for a time when they will respawn back in the burning hells, which supposedly prevents them from coming back to "Sanctuary" (unless summoned or something else happens). Well during the course of the game the Three Prime Evils and Two of the Lesser Evil's are actually vanquished. Mephisto's SoulStone was smashed in Hell first, and then Diablo's after he was defeated. The Third Prime Evil Baal was killed, however it never showed what happened to his partial SoulStone; whether it was destroyed also or, if because it was so damaged; that it couldn't house him at all. ****None the less; AS TYRAEL SAID IN D2LOD ending, "We are too late Mortal, The Worldstone has to be destroyed because Baal had already corrupted it with his touch." the Worldstone was destroyed and DID NOT HOUSE THE SOUL OF BAAL****. So Here we have all three prime evils SENT BACK to the Black Abyss (not hell) and two of the lesser evils sent there as well.