Spielberg has a great movie musical somewhere in him. A WSD remake would be pointless, though. He'd be so much better suited for CAROUSEL. Or--gasp!--something original..?
"Impossible is just a big word thrown around by small men who find it easier to live in the world they've been given than to explore the power they have to change it. Impossible is not a fact. It's an opinion. Impossible is not a declaration. It's a dare. Impossible is potential. Impossible is temporary. Impossible is nothing.”
~ Muhammad Ali
People forget that this is Steven Spielberg, not Paul W.S. Anderson. He has consistently made good movies his whole career. I have quite a bit of faith in him.
Here's the thing...we enjoy seeing different stage productions of the same musical, so why not different screen adaptations of it?
As much as I love the original WSS movie, I wouldn't mind seeing what a new team could bring to it. That said, I hope they would not update it to contemporary times. Usually, the only effect that has is making it look MORE dated. Somehow, if you can keep it nominally in its 1957 time period (and don't forget, that time period's important...it was the time of a new wave of Puerto Rican immigration that some quarters felt threatened by) but keep the costumes simple (t-shirts and jeans in different color schemes), it will remain timeless-looking.
I'd keep the original film's "Krupke"/"Cool" order since I think "Cool" is FAR more powerful in the film version after the murders.
I'd cast as many young unknowns as I could possibly get away with, maybe raiding the High School of the Performing Arts.
I'd make sure I'd cast a Tony that was as believable a former gang member as he was a lover.