A replacement for Hubble has been in the works for years now. It is suppose to be in orbit by 2010. There is also an organization that wants NASA to bring back Hubble once it is out of service in order to put it in a museum. Knowing how much it costs to send up a shuttle, it is going to be a hard sell unless they can raise a lot of $$$ in order to convince NASA.
Some of the newest ground based telescopes, like the ones on Mauna Kea in Hawaii, are almost as good as Hubble. The best idea I've heard for a space based telescope would be one built on the far side of the moon.