I've been dubious that New Orleans should be rebuilt, at least in the same location. It's an accident waiting to happen, having a major city sitting underneath a lake with only a pile of dirt between it and catastrophe. The Mississpi is trying to change course and can't be checked forever, etc. On the other hand, it's almost impossible to imagine it not being rebuilt, given the emotions of people who want to return to their home, and the fact that NO, destroyed or not, is still at the center of a massive amount of transport and energy infrastructure.
This issue is politically sensitive, to say the least. And I'm hardly an expert, so I should probably shut up about this (and many other things, but what's a blog for?)
Anyway, here's an article by someone who actually might know what they are tallking about that suggests that a rebuilt New Orleans could be a showcase/laboratory for green development. Can something positive be reclaimed from this tragedy? Who knows, but it's encouraging to see this direction of thought. As one of the commenters said:with climate change, we're all gonna end up living in the flood plain.
Update: here's a more hardnosed-engineering sort of take on the same issue.
And, linked from the comments there, here's someone discussing the Mississippi's attempt to switch channels. Apparently this is happening way upstream from New Orleans, so if it happened the problem for N.O. would not be floods but a sudden lack of a river. Time to read John McPhee's The Control of Nature.