"You don't see any way these aircraft could be upgraded."
They have been. Constantly. For decades.
"Seems to me that for three billion they could have new more efficient more powerful engins, avionics, insturmentation fly by wire etc. Really bring them up to 21st century standards."
They got new engines some years ago (when I flew them, we had the old "water wagons".........J57's, if memory serves; water injection on heavyweight takeoffs. Dangerous as hell.) They now have far better engines than my day. Avionics, the fuel panel, etc......all upgraded. As far as fly by wire, etc...........after a while, you really just have to look hard at how long you can ride a horse. These aircraft are rugged as hell, but they DO have a finite lifespan. You must realize that you're talking about aircraft that were built.......not designed.......in the late '50's and very early '60's. The airframes themselves are just damned old.
"If I remember right the KC135 has eight engins."
No, it has four. You're thinking of the B-52.
"Heck the 767 was designed back in the sixties."
Initial models were ordered in the very late '70's.
"We just have little to add to the great planes designed for WW2. Especially for a tanker that will always fly slow due to the large cargo."
The KC97 came out after WW2. The KC-135 replaced it, again, based roughly on what became the 707 airframe. The differences among today's aircraft and WW2 aircraft are...................well, it's night and day. Not even close. As for slow, even in my old KC-135, we could scoot along pretty fast. Even had to drop flaps and fly LOW so that A-10's could even keep up with us. Modern, swept-wing heavies can flat get it. It isn't unusual to refuel at well over 320 knots (nautical miles per hour).
This is about obsolescence and fuel load delivery, period. Aircraft DO get old, metal DOES fatigue and develop cracks over time. The KC-135's should long since have been retired. The KC-10's have been decent; just don't have enough of them........and even those are getting long in the tooth.
If we expect our Air Force to maintain the worldwide missions that have been laid on them over the last decade +, we need to equip them with the best. They are not flying the best, and prudence dictates that throwing more money into aging gear isn't always the best nor even most cost effective option.