I have to say that I always preferred New Nightmare, simply because it showed what Wes Craven can do without studio interference.
The Nightmare on Elm Street series always suffered from a lack of coherent artistic vision, right from the beginning. The original movie's shock ending is the beginning of this trend, with the studio throwing away Wes Craven's original vision in favor of a cheap thrill. The rest of the franchise was built on the shoulders this little mistake, and with no one at the helm the result was haphazard and occasionally horrible. The original ending was a hopeful one, but all hope in the series had steadily been replaced by needless brutality and bad cliches.
I think that a reboot is necessary, simply because the series as it is now isn't particularly salvageable, but I'm afraid that this reboot will miss the point. What the series needs is consistency, and a sliver of hope. Not a big one, but just enough.