I visited New Orleans over Easter.
My girlfriend's family lives there and she did too, prior to Katrina. Her father's home only had about a foot of water. He just moved back in in November 06. Her Mother's home was 400 yds from the break in the 19th ST Canal. She has never moved back into her home as it flooded to the second story, and instead fixed up her mother and father's home. Both of them have money, which they spent to fix their homes, as the hurricane insurance was denied, as the government backed the insurance companies and said it was a flood and the hurricane had nothing to do with the flood... (go figure)

Both of them are in process of law suits against their insurers.
The big problem that is happening in New Orleans at this time is lack of leadership. Areas are being allowed to have reconstruction on a piece meal basis. The bad thing about this is that the city now has to get utilities to these areas. The leadership should have flat out closed up areas and just not let people in, instead, they vented, postured, and continued the same ole corruption.
One misleading thing though is this. The federal government is helping on a massive scale for levy projects (which is scary) and some public works items. They are not (for the most part) building any permanent housing to replace what is lost. That is up to you as a citizen, otherwise, you can just live in a FEMA trailer, or move.
The funny thing about all this though is... were this New England's coast, Florida, California, or any other affluent area, the problem would have been worked on far more diligently, and effectively. Take what you want from that.