Originally Posted by footie
Funny you should say that, as on some Audi sites there is a rumour going around that the S4 will receive not the v8 from the S5 but an entirely new engine, a v6 Bi-turbo no less. If that happens does this mean the S5 will change to the same or possibly keep the v8 but get Audi's new ValveLift technology to squeeze an extra few horses out of the old girl. The technology is meant to not only increase economy but aid power and torque to the tune of 8~10%, that would be equal to 385~390hp and 350ft/lbs of torque, not to far off what the M3 is producing now and well ahead on it's main rival, the 335i.
VAG has surprised me before as far as developing a new engine when a perfectly good one sits on the shelf already. So I certainly would not rule out a turbo V6 in the B8 S4 instead of a V8.
Still, Audi is sure to continue to refine the standard series (A6, A8, Q7) 4.2L FSI V8 for more power. I'll guess that the new A8 (MY2010) will get a bump in power to 380hp or so, likely borrowing from the RS4 V8 technology where appropriate/available, and/or also using the variable valve lift technology you mention above. They could then apply this motor directly to the S4 and S5 as well.
Even if that happens, Audi could still use a turbo 6 in the standard A4. An LPT system like BMW uses would do wonders to keep the higher volume A4 competitive, instead of having to compete with BMW's 335i via the low volume S4 model.