However, my opinion is that characters in fantasy novels are not generally speaking English. They are speaking some other language, and the author is essentially translating that language into modern English for the readers. So to me it is only logical for characters to speak modern English in a fantasy novel, as there is not always a good reason for an author to be translating the language into anything other than the language of his or her audience.
I do admit that going overboard with modern slang and such would kill the fantasy vibe, and there is no reason to use modern slang. The English language is fully sufficient to translate fantasy languages without having to resort to our slang.
What do you think?