Reason for controversy: The ability to form overt homosexual relationships, including gay marriage.
Open-ended character development was Fable's biggest selling point. You can play as a saint or as a sinner, as a strong barbarian or as a scrawny magician... and, yes, as a heterosexual or (gasp!) a homosexual. The freedom to form lasting and meaningful relationships with male or female characters in the game was a potential powder keg waiting to blow.
How did the media miss this one? We have a couple theories. First, The Sims franchise got there first. The original people simulator enabled men to kiss men and women to make out with women. The sequel, which came out a mere week after Fable, went further by throwing the alternative couples into bed and wedlock together.
Fable, in comparison, is positively timid about homosexuality. The men that your male alter ego can hook up with are mostly fat and ugly. Moreover, they're downright hesitant about the whole gay affair. Perhaps the religious right looked at Fable and decided they approved of its attitude after all.
On the other hand, what will they think of the thorny issues raised in Fable 2?