Since everyone seem so excited about the possibility of instituting a playoff into college football, and because I don't want to do my homework, I figured I'd come up with my own proposal. 

1) The Cotton Bowl gets a promotion, giving you five BCS Bowls: Rose, Fiesta, Cotton, Sugar, Orange.

2) National semi-finals will be played on New Year's Day, pitting the #1 vs #4 and #3 vs #2.  The four BCS Bowls (minus the Rose) will rotate playing hosts to the semi-finals.

The Final Four will be the four highest ranked teams according to the BCS who have won their conferences.  Sorry, SEC, but this maintains the priority of a team winning its conference.  (And, therefore, only 1 team per conference.)

3) The National Championship will be hosted by one of the four cities (Glendale, AZ, Dallas, New Orleans, Miami) and will be held one week after the semi-finals.  The host city will be one of the cities that was not designated as a semi-final.  This city will then host two games: Its bowl game, and then the NC.  By contrast, the semi-final cities will only have one game, which is their Bowl. 

4) The Rose Bowl Exception: The Rose will not be in the rotation to be a national semi-final, and Pasadena will never host the Championship.  In exchange, whenever either the Pac-12 or Big Ten champion is in The Final Four, the Rose "steals" them, and they will play their seeded opponent in the Rose Bowl, making the Rose one of the two semi-finals.  Furthermore, if both the Pac-12 and the Big Ten champ are in the Final Four, then they both get stolen and play each other in the Rose, regardless of seeding.

Here's how it would've ended up:

2011:  Semifinals: Rose (#3 Oregon vs. #4 Wisconsin), Fiesta (#1 LSU vs. #2 Oklahoma State) NC: New Orleans
2010: Semifinals: Rose (#2 Oregon vs. #4 Wisconsin), Orange (#1 Auburn vs. #3 TCU) NC:Dallas
2009: Semifinals: Cotton (#2 Texas vs. #3 Cincinnati), Sugar (#1 Alabama vs. #4 TCU)  NC:Glendale
2008: Semifinals: Rose (#2 Florida vs. #3 USC) Cotton (#1 Oklahoma vs. #4 Utah),  NC: Miami
2007: Semifinals: Rose: (#1 Ohio State vs. #4 Oklahoma) Fiesta (#2 LSU vs. #3 Virginia Tech) New Orleans
2006: Semifinals: Rose (#1 Ohio State vs. #3 USC) Orange (#2 Florida vs. #4 Louisville) NC: Dallas
2005: Semifinals: Rose (#1 USC vs. #3 Penn State) Sugar (#2 Texas vs. #4 Notre Dame) NC: Glendale
2004: Semifinals: Rose (#1 USC vs. #4 Utah) Cotton (#2 Oklahoma vs. #3 Auburn) NC: Miami
2003: Semifinals: Rose (#3 USC vs. #4 Michigan) Fiesta (#1 Oklahoma vs. #2 LSU) NC: New Orleans
2002: Semifinals: Rose (#2 Ohio State vs. #4 Washington State), Orange (#1 Miami vs. #3 Georgia) NC: Dallas
2001: Semifinals: Rose (#3 Oregon vs. #4 Illinois), Sugar (#1 Miami vs. #2 Colorado) NC: Glendale
2000: Semifinals: Rose (#2 Florida State vs. #3 Washington), Cotton (#1 Oklahoma vs. #4 Florida) NC: Miami
1999: Cotton (#1 Florida State vs #4 Alabama) Fiesta (#2 Virginia Tech vs. #3 Nebraska) NC: New Orleans 
1998: Rose (#2 Florida State vs #3 UCLA) Orange (#1 Tennessee vs #4 Texas A&M) NC: Dallas