In the single-player game, you create a single character and then start. You don't create an entire party and then begin simply because you don't start with an entire party. If you don't like the sound of that -- well, that's tough, but I suppose the game can't be everything to everyone.

As far as how characters are dealt with after the beginning, that remains to be seen. At the very least there's going to be an array of pre-made NPC's available to take along (or not).

The multiplayer game will work differently, but I have my doubts that even then you will be generating an entire party right off the bat a la Icewind Dale or ToEE -- most likely the mechanic of creating a single character and entering the game will be the same either way, though the mechanics in either case are bound to change a significant amount prior to release as we test things out.