I really think they need to keep the film gritty, realistic, and as story driven as possible. Keep it as far away from mindless stereotypical hollywood blockbuster status as possible. Give us characters we can care about, not the generic band of misfits who band together to stop the creature (e.g., the paint-by-numbers hero, the computer nerd, the tough guy, the comic relief).
And I agree that we need a CGI creature, but base the CGI on the iconic suit design. Make it as recognizable as possible, and stray away from new interpretations like the ridiculous square-faced albino t-rex.
I know people here say "leave godzilla to the Japanese," buit I honestly didn't enjoy the last batch of "modern" godzilla films released in Japan. They were all too bizarre and felt like episodes of Power Rangers. I think Hollywood can do a good job if they get a really good story and don't give it to a director like Roland Emmerich or Michael Bay, and instead give it to someone like Neill Blomkamp, who (seems, at the moment) to know how to balance story with spectacle.