Havok's site has confirmed that Super Smash Bros. Brawl will use Havok Physics. So what are Havok Physics? Well I didn't know either, but wikipedia had this to say:
“It is designed for computer and video games by allowing interaction between objects or other characters in real-time. By using dynamical simulation, Havok allows for more lifelike worlds and animation, such as ragdoll physics.”
Sounds good to me!