I think its about time for a major leap forward type revelation with it. Instead of making it backwards compatable with the earlier games, they should make a new generation, with no new pokemon, allowing it to span ALL the continents and revamp their fundamentally flawed system. It is becoming unsustainable in my opinion, but as long as people keep buying it, they'll keep making stupid looking pokemon and repackaging their game.
A few improvements I can think of off the top of my head would be:
1. Do away with HMs taking up a move slot. Like completely. HM slaves are a painful evil
2. Instead of having 100000 moves to choose from but only about 10 good ones, have movesets that upgrade as pokemon level. Every few levels you're allowed to add points into improving a moves power, accuracy or adding an effect. etc
3. Cut the crap with team rocket, galactic, magma, aqua etc. If they're evil, make their actions have some level of peril other than ooh they're mean to pokemon. Blaaah
4. Like I said before, let it span ALL the continents so you can collect ALL the pokemon and beat every regions gym challenge and maybe even a new story for every region.
5. Try try TRY to make pokemon that aren't completely ridiculous.
Just some ideas I've had, but I think they need to innovate along these lines.