It's a cool idea. Bornakk says, "Maybe." There are a few tangles in the plan: currently, Atiesh requires a trip to C'thun in AQ to get the base (I believe because Brann Bronzebeard put it there), which is a 40 man raid that most guilds don't want to bother with. And of course the stats would need some updating-- it's a nice staff, but not exactly a Legendary level 80 any more. And finally, the staff provides a portal to Karazhan, and at level 80, will that really be as amazing as it used to be?
Bornakk also says the lore needs to be set in place, but that's a copout-- Blizzard can do whatever they want (what if the Kirin Tor decided to repurpose Atiesh and combined it with a new base that didn't need to come from AQ40?). But the biggest issue with bringing back Atiesh is that there's so many other good items that could just replace it. Medivh's staff is hardly the most important item in the game any more, and as Bornakk points out, even though Medivh had great power, it didn't necessarily all come from his staff.
I can't wait to see Naxx's new purpose in WotLK, but there are too many old items floating around for Blizzard to worry about updating. I'd rather see new legendaries, and maybe even some artifacts, come out of the new Naxx and Northrend.