Ford has been very tight lipped about the future of the Ranger, so who knows what will actually happen with it.
Though Ranger sales have been declining steadily, it still outsells most of its competition. Currently only the Tacoma has a solid sales lead on it (roughly twice the sales). The Ranger and Colorado flip flop between second and third in sales. The Ranger still has a sizable lead on the Fontier, Dakota, and Raider. That, IMO, is reason enough to keep it in production. Considering a truck with a 15 year old body, 10 year old suspension, 25 year old frame, etc can still outsell most of its competition (all completely new since 2004/5), it seems like an all new Ranger should be able to get back to first in small truck sales in no time.
In addition to still having high sales, the Ranger also has the highest owner loyalty in its class. Of course, people might be hesitant to trade in their old Ranger if a new one is essentially the same.
One problem with all small trucks that has kept Ford from redesigning the Ranger is that small trucks as a group have low profit margins. Their material costs are higher than those of a regular car, but they can not be priced too high above the starting price for full size trucks. Since the Ranger still sells, and all development costs have been paid for, they are hesitant to spend billions of dollars on a complete redesign that will take a long time to pay off.
There is also the issue of what to do with the Explorer Sport Trac. Ford likes having it around because they can add it into Explorer sales. However, it cannot replace the Ranger as a fleet or entry level vehicle. Sport Tracs are expensive, they have almost no fleet market, and they are geared more towards people who want an SUV they can carry dirt in than a small work truck. On the other hand, if they keep the Ranger around, they would almost have to introduce a crew cab model for the US market or risk having the truck shunned in magazines and ignored by consumers. But of course having a crew cab Ranger would kill off the Sport Trac, and Explorer sales would drop.
Hopefully Ford will redesign the Ranger. I would like to see it offered in all of its current configurations, plus a crew cab with two bed lengths. Offer an I4 and the new Duratec 35 with some tweaks, use a downsized F-150 frame (super strong, fully boxed), offer a 6 speed manual and 6 speed automatic, keep the size close to the current size, then sit back and watch it pass the Tacoma in sales and creep back up to 1998 levels (350,000 Rangers were sold in 1998). Sadly, the future may not be so bright. I have a feeling the Ranger may go the way of the Bronco. Ford is pretty desperate right now, and they have been making some decisions that don't seem too smart.