I was born in New Orleans in 1979. In my time there (which lasted until summer of '87), there were a few threats of hurricanes but nothing incredibly harmful came of them. Just watching the TV yesterday, you could say it was inevitable that a bad hurricane would hit the town, but I don't think anybody really lives to see such devastation.
New Orleans is a classy town filled with lots of history, so seeing it flooded out was very sad. I haven't heard about what all was safe and what was destroyed, but I wouldn't be surprised to hear about some irreplaceable things that were lost.
Now I don't know how badly damaged it was, but the most memorable place that sticks out in my mind is Cafe Du Monde, best known for its beignets and coffee. I remember it very well from my formative years as a resident and a little better in later years as a visitor. Sure, you can have beignets and milk at home but the kind of atmosphere you have there is unique. When I saw this quote from the Cafe Du Monde website (courtesy of Kev): "The Original Cafe Du Monde Coffee Stand was established in 1862 in the New Orleans French Market. The Cafe is open 24 hours a day, seven days a week. It closes only on Christmas Day and on the day an occasional Hurricane passes too close to New Orleans," I found it comforting. They know they will be back in business even in the face of a hurricane. Granted, it will be longer than a day before they will be back open.
I haven't been to New Orleans in about ten years so I don't know what all changed in that time. My childhood memories have not diminished and I know eventually the town will get back to its normal (or depending on how you see it, abnormal) self.