Miyamoto talked to Japanese magazine Famitsu weekly about the development of Mario Sunshine.

Apparently, Mario Sunshine will use time is some sort of way, like Zelda - the Ocarina of Time on the N64 did. In this game, gamers could control a young and an old Link.
Unfortunately, Miyamoto didn't tell how time will be incorporated in Mario Sunshine.

He also said that it's now been decided how big Mario Sunshine will be. The programmers have now definitely determined the amount of levels.

Source: Famitsu weekly