This is true for ALL products. Once new versions come out the older versions go in decline. Or do you honestly still watch movies through VHS? It's really simple basic economics, I'm sure Blizzard is fully aware of this effect and have made changes to the game accordingly.
What is there to improve? When the first cars were invented people were still trying to breed faster horses. It's just a stupid battle that you can't win. That's pretty much what you're suggesting as well. In the end a horse can't compete with a car. WoW can't compete with newer games. There is no simple change to WoW that will bring people back in masses. WoW is old and outdated, it has been in decline for a few years now and that will only continue.
The only thing that could get people to return would be releasing WoW 2 with an updated engine, updated graphics, updated game mechanics, new story, etc. But that would be an entirely different game.