Dave Brody advocates retiring the shuttle now - or at least after servicing Hubble one more time.
I've got to agree. A few things are clear to me:
Shuttle costs $4.8 billion a year. I think the question to ask is:
What could a streamlined project achieve in 5 years with a 20 billion dollar budget? Would the result be cheaper to operate than shuttle?
Given the right approach and design philosophy, I think the answer is a definite yes. Or, to put it another way, what would you get if you gave Burt Rutan $1 billion to develop a vehicle?
If you ask the other question:
What is the chance that NASA can develop a follow-on to shuttle while still flying shuttle?
The answer is "slim to none"
Note that if you do develop a nice follow-on to shuttle - perhaps a vehicle that you can use to, I don't know, perhaps "shuttle" people from the earth to orbit - you can use expendables to launch ISS modules, and then your new vehicle to get people up there for assembly.
Will it happen? Seems pretty unlikely to me. The politics of the situation do not favor the right thing happening, and NASA has always been driven by politics.
(Via Phil Plait's excellent Bad Astronomy)