As mentioned previously in our Diablo 3 Difficulty Levels post, the Diablo 3 Level Cap will be 60. However, the level is cap is far more than just a number and there is a lot more to it that that.
There has been a lot of debate on this topic. Many argue that a higher level cap gives players a more rewarding experience, especially when playing content for the second time or grinding. The reason for this is that once you reach the max level cap, your character can no longer gain more strength apart from items and other drops, so after max level everything you do is less valuable.
You are expected to hit the Diablo 3 Level Cap when you kill the last boss on Hell difficulty. So with the argument mentioned above, playing Inferno difficulty will be less rewarding because the player will never get an levels.
Some also thing that the level cap is low so that Blizzard can increase it in further expansions. In Diablo 2, they couldn't increase the level cap because of how high it was. The level cap in Diablo 2 was 99, and to reach this you needed to do a LOT of grinding. So while most players finished the content and stopped leveling, there where those hardcore individuals that grinded to the last level. So it was not possible for Blizzard to add additional levels past 99, because that would effectively tell the "normal" players that they had to grind to 99 first to get to the additional content.
Bashiok from Blizzard argues this point by saying this is not the case because Diablo II: Lord of Destruction sold a very high number of copies and didn't add a single level, only content. So saying that planning an increasable level cap just to sell expansions isn't true. Bashiok also mentioned World of Warcraft: Cataclysm, which only added 5 levels (and a lot of content ofcourse) and was the fastest selling game of all time.
So Blizzard wants to make a strong point that the level cap has little to no impact on future expansions and how much you enjoy them, with the impact being from the actual content and not more levels the player can grind.
However, having said that, it is not out of the question that the Diablo 3 Level Cap is raised in the (if any) future expansions, to keep pace with additional content.
The official quote from Bashiok is:
I'd like to know why. Why is that obviously the reason? I'm not picking on you, I've seen more than a few people say this. Is it because obviously people wouldn't buy an expansion unless it had more levels? That's obviously not true because LoD sold many copies based on an additional act, new classes, new items, runewords, jewels, charms, cubing, 800x600 resolution, etc. etc. So looking at what expansions provide, how is it logical to say that we'd obviously make level 60 the cap so we could finally have some way to sell these pesky expansion things?
If you want to draw the WoW comparison, Cataclysm only offers an additional 5 levels, as opposed to the previous expansions' 10 levels each, and it was still the fasting selling PC game in history, topping the previous title holder, Wrath of the Lich King. And you could make the argument "Well there are a lot of things that go into that beyond just some more levels." And I would say "Exactly."
If we felt 99 was the best level cap to have in Diablo III, that's what we'd be doing. We work extremely hard to design, produce, test, and support finely polished games with a strong focus on fun, and that is the obvious reason these design decisions are made.
Let me follow that up with a disclaimer - We aren't thinking about an expansion at all yet, but as levels are intended to pace content (we expect you to hit the last level around when you kill the last boss on Hell) it's not unreasonable to assume that additional levels would be present in an expansion, assuming it did offer additional content we'd want more levels to keep pace with.
I don't refute the logic that an expansion could bring more levels, but I fully refute any idea that we're making design decisions that directly impact the core of the player progression system so we can have a bullet point on the back of a box.