I would prefer them to work on Civ4 with a completely new and well-thought for adds-on engine rather than wasting time on improving (probably nicely) an engine too limited.
But that would probably take two years if it were to be any good.
So in-between why not publish a best of the net CD with maybe a few more tweakings. Would require much less work from them, they could keep the serie active and make some money to put into a Civ4.
Now I have to admit if there is a Civ4 I won't buy immediately and wait to see if it included what I want, otherwise I will stick to Civ3 until they have something really useful for me (mod/play scenarios).
Anyway for a Civ4 I hope they stick to the same animation format (or at least provide a tool to import/convert Civ3 units), and more importantly I hope they keep the good ideas of the prior versions (including Civ2 scripting, or unit trading, special flags and units of Civ3, civil war and partisans), and new things (diplo, trade, bonus flags, support distance and a minimap for combat are the main ones that come to my mind)
Of course from a Firaxis / marketing point of view that might not the best idea

And I might not be the "average customer".
