I understand some of the rancour on this thread - anyone not playing the current edition will have trouble finding new members for a D&D gaming group.
But I don't think WoTC has any other choice. If they want to remain viable, they must make the best possible return on the capital invested in them (otherwise Hasbro will liquidate that capital and invest it elsewhere). This means producing books that will sell. The Complete Book of 3.5 Flumphs doesn't fit that description. I find it very easy to believe that 4E does.
I also think that some people are underestimating the problems facing 3E. As a long-time RM player, I know what it means to play a game whose rules are full of options. The main thing is that it means no module or campaign setting that you buy has monsters and NPCs statted in a way that exactly fits the way you play the game.
D&D 3E/3.5 has exactly the same problem. So many people are playing with so many variant rulesets (between core only, one or more Complete books, Unearthed Arcana etc) that even if WoTC wanted to make modules it would have a hard time making them fit everyone's game.
Besides the proliferation of options, 3.5 also suffers from clunky design. John Cooper's unofficial errata in his reviews on this website are proof enough of that: if the core designers and developers for the system have trouble generating rules-legal stat blocks, something has gone seriously wrong. For my money, the glaring flaws with 3.5 are:
*Excessive complexity in generating creature and character stats (too many sources of bonuses, too many skill points, etc);
*Some overly complex resolution systems (grapple, aspects of AoO, rules for non-lethal damage, unarmed attacks, overlapping mechanics of spell resistance and saving throws, contrast between full-action spells and one round spells, to name a handful);
*A degree of incoherence in the relationship between the metagame and in-game aspects of rewards: treasure is both a reward for players (as it improves their PCs) and also has a clearly defined in-game significance, but XP are far more ambiguous - at times the suggestion is that XP, levels etc are purely metagame concepts (and this is also suggested by the fact that they are earned in a way that can only be given a metagame justification, namely, by adventuring) but the spell component and magic item rules treat them as an in-game character resource also;
*Coherence problems also in the ways characters/creatures are modelled - hit points, BAB etc suggest a focus on high fantasy, but skill definitions and rules for skill use are much closer to RM or RQ-style simulation of gritty fantasy;
*Related to the above, a lack of rules to facilitate fairly common tropes of high fantasy, such as pursuits, acts of derring-do, and characters pushing the limits of their power (either physically or magically) and exhausting themselves as a result - in part this is a consequence of the absence of metagame mechanics for giving players a degree of narrative control over the outcome of PC actions;
*The use of Raise Dead (which has in-game as well as metagame significance, and is subject to sometime arbitrary GM interference) rather than Fate Points (a purely metagame device) to give players narrative control over the fate of their PCs;
*An inability to decide whether alignment is purely descriptive (as the PHB suggests) or also prescriptive (which is implied by the assumption in most modules and campaign worlds that PCs are Good), and a related inability to coherently explain the internal psychology of "ordinary" Evil people (as opposed to serial killers and other psychopaths).
From the early announcements it seems like 4E will try to resolve at least some of these shortcomings. That has the potential to make D&D a considerably better game, and seems to me to justify a new edition independently of any financial considerations that may have motivated WoTC.
