The scary thing is it's getting worse as the days go by. Biloxi, Mobile, and several other cities were also blasted by Katrina, but at least now they can start the long process of fixing things. New Orleans can't - its problems keep on growing. The attempts to fix the levees have failed, either due to not ever starting or simply being unable to. There's a prison takeover by the prisoners. The waters are still rising, people are still stuck on roofs, the looting is getting worse and even police and firemen are joining in. Not only is the environmental situation getting worse - i..e flooding and its aftereffects - anarchy appears to be growing.
The old saying "It's going to get worse before it gets better" has never applied with such truth.
For news from the city, try http://www.wwltv.com/local/stories/WWLBLOG.ac3fcea.html. It's a blog from the last TV station to stay in New Orleans, as I understand it. They update every few minutes with one to two sentences of news. (Update: NOLA.com is also a good source of news, where I just read that the rivers feeding into lake Pontchartrain are at flood, so the lake isn't falling as it floods New Orleans - it's rising, which means more water to flood.)
Again, please donate. Red Cross, Salvation Army, a local blood bank, what have you. Check to see if your business is matching donations. Find some things you don't need. But, as said on several TV stations, don't go down there yet. Give from a distance for now.