The governor of Louisiana says no one will be allowed back into the city for 12-16 weeks. So assuming at least 16 weeks (because so far every projection involving the Katrina catastrophe has been over-optimistic) no one will be allowed back into New Orleans until Christmas. And when they get back, their house will probably be gone anyway. And whatever job they had there will also probably be gone. Tourism, one of New Orleans' biggest sources of jobs will not return automatically. People go there to party, not to see a depressed town where where people are homeless and jobless.
Except for people who work in the oil and gas industry who have to be in the area, everyone else will probably find jobs elsewhere and never go back. (This blogger has similar thoughts.)
So I think that the authorities, instead of working under the false assumption that everyone will move back to New Orleans and rebuild everything, need to more realistically work towards easing the former residents' migration to new locations, and making this the number one priority ahead of draining the city, which is no longer filling up with water because the water level has now equalized with the lake.
This end of New Orleans may have the effect of extending the housing bubble a while longer, because all those displaced people will need new homes.