It's been long demanded by players, but during Blizzcon, Blizzard stepped forward for the first time and officially stated that work on new player models is in the pipeline:
Art Director Chris Robinson spoke on this just moments ago at the BlizzCon Open Q&A panel. It was in reply to an attendee who brought up that, in the art panel, it was explained that the pandaren model has 10 times the bone structures of the classic races, allowing for many more facial animations.
To paraphrase his statement -- which isn't too different from what I've said here on the forums before -- we absolutely plan on updating the existing models. As Chris mentioned, we want to make sure we preserve the look and feel of the original models players have come to know and love, while vastly improving their model and animation quality to be more in-line with the newer races.
We're not going to hide behind the statement that too many players will get mad if we tamper with their models, but it's a concern -- not a concern that's going to stop us from doing it, however. I want to stress as well that it's a massive undertaking to go back and do this. And to a lot of people it's something that won't be considered shiny new content. But not only do we hear the masses of players calling for this update, we really feel it's time to bring them up to par with newer models as well.
The game continues to age, but as we have no plans of slowing down on development any time in the near future, we want to keep updating and polishing it to stand the test of time (again, without sacrificing the look and feel which has brought players in over the years).
Edit: Development as of March:
We already know that new character models are in the works for old races. Do you have any idea of when players will be able to see them and do you plan to also revamp newer races such as the Blood Elves and the Draeneis?
We are slowly in progress with revamping the races, but the reality is that at best we would get the Dwarves for Mists of Pandaria, and even that's on the bubble. It is something that we are planning to do, it is something that we want to get to and actually believe is valuable. As to when the the Blood Elves and the Draeneis would have that happen, they would probably be near the end of the list. We would probably get through all of the original races first before we go on to them since they are better than the original ones. Any of the ones we have done more recently tend to be a little bit higher fidelity.
So there you have it. New player models are definitely being worked on as we speak, but they will be a long time in coming.