Ford just announced that the 2011 Mustang with 3.7L V5 will get 19mpg city and 29mpg highway, with the manual transmission. This is due in part to the use of newer engine technologies such as variable cam timing, and they haven't resorted to direct injection or turbocharging (yet).
I went on Edmunds and did some digging, to make a chart of how the base Mustang engines have evolved over the years. It is a great example of how far powertrains have improved in the last 15 years.
Since the 1990's the Mustang base powertrain has gotten dramatically more powerful, while keeping about the same fuel efficiency. Now, for 2011, both power and fuel economy are improved. This same pattern is going to repeat on other vehicles going forward. Instead of just ramping up performance, automakers are going to be looking at efficiency, while trying to preserve power and affordability as best they can.
The good old ICE still has a long way to evolve before it is put out to pasture.