Next year another Nights movie will be being released if all goes according to plan, according to several sources, thanks to Paul for bringing this up.
The new film is allegedly based on the 1942 film Arabian Nights which was a technicolor Orientalistic Hollywood Blockbuster starring Sabu and Maria Montez (and Shemp of Three Stooges fame!). The 1942 movie had nothing to do with any of the Nights' stories as far as I can tell besides using some names like Sheherazade and Ali Baba (but ultimately I suppose that makes it part of the Nights canon regardless).
Here is the trailer for the original 1942 film:
The new film is reportedly (http://www.mania.com/arabian-nights-3d-coming_article_118656.html) going to be shot in 3D and is directed and co-written by Chuck Russell, director of The Scorpion King among being associated with many other films. At $70 million USD it's likely to be on a blockbuster scale (maybe for next summer?).
Regardless, the Nights lives on, better than ever I suppose.
More info on the upcoming film:
Chuck Russell - http://en.wikipedia.org/wiki/Chuck_Russell
IMDB - http://www.imdb.com/title/tt1541150/
Variety - http://variety.com/article/VR1118010826.html?categoryid=13&cs=1
Cinematical "Pre"-review - http://www.cinematical.com/2009/11/04/scheherazade-takes-a-backseat-in-3d-arabian-nights/