WhyBob that's what my dream is to build some thing nice.
I'm sorry to hear what happend to your set up but you should know that this is one of the things that did not die yet in this coubtry. I did go in to one hobby shop in manhatan and the later at the register tells me that no one is in to hobbies these days only computer games.
But from my little research I found many many people still interested in trains and the same companies are still makeing trains for hundred years. I found one very big train shop a few minutes from my house
www.trainworld.com they have so many trains in all scales that you can go crazy. I took my son and we both felt we want to go with lionel/o scale the others where nice and cute I like them all but if I need to stick to one for now we like the live look in the O Scale.
I just want to tell you one thing, if you have the time and the $$$ of course its not to late to start some thing with your grand kids. There are so many places you can find trains people to talk to about trains, than when you were a kid there was no interenet. :
I was on craigslist I saw a guy selling trading and repairing post war models. You might even find the exact style trains you had back then.
I was thinking of starting with some NYC trains from my era that are being pulled off the lines and maybe from before, then I might get and old fasion one or two that might be cheaper. Unless its something special. And the most interesting thing of all you find mostly adults who are in to these trains.