It was originally titled Origins: Wolverine 2, but as the first film sucked so much adamantium-laced balls I think they decided a full reboot was a better idea. It's definitely still part of the Wolverine back story. The only thing more surprising about the fact they're going ahead and making it is that Darren Aronofsky is directing it. I'd call that a very strange career move given his ever ascending star.
The whole thing sounds extremely bizarre. How many origins does he need? And aren't they still making X-Men Origins: Something-or-other-else? How many films are there going to be altogether?! I haven't even seen the first three yet!
I think they shelved the Magneto movie, but they are currently filming First Class which is all the characters as kids and young adults. Can't really see the point in that. Perhaps the demographic for the films to date suggests they're most popular with teenagers. The Wolverine film certainly felt like a film for dim witted kids. The trilogy is pretty good- particularly the first two. Good actors playing interesting characters and some nice dark moments for comic book movies.