I think it would kind of be cool to make it animated, but with live action shots of the real people playing in the game. I feel like this movie could help explain the dialogue that happens after you defeat the dragon and maybe explain how the mechanics of the game work. Where did these mobs come from? How come all the zombies kind of look like Steve? What is the culture of the testificates? How does redstone work as energy? Hopefully they will answer these questions and more in the movie. We don't need Herobrine in there because this movie is going to be canon for the game. And if Herobrine is in the movie, then he is officially considered canon and instantly loses that mystique. I like Herobrine but please don't make him canon.
I'm guessing that the zombies used to be Minecraftian's like Steve (Same for Skeletons and Endermen), but the Ender Dragon used her power to create an undead plague, and Steve is the last survivor of the Minecraftian race.
Have you seen the Lego Movie yet? I don't want to spoil it, but it's pretty awesome. Warner Bros did LEGO proud, and now has its sights on giving Minecraft a similar movie makeover.
As of this writing, there are no hard dates for production (or release), and it seems that talks between Mojang and Warner Bros are ongoing.
Rumors abound on whether the movie will be animated, or live-action. According to film blog "Deadline Hollywood", Roy Lee (co-producer of the LEGO film) is set to produce Minecraft. Notch has said that Mojang will retain a significant level of creative control of the movie, something they are not willing to budge on. Who will star in it? What will the story be about? At the moment, no one knows!
Keep an ear to the ground - we might see a Minecraft movie before the end of the year.