There’s an interesting discussion going on, including bets in the one or other favor, in the Audisphere what kind of engine will be featured in the next-generation Audi S4. Have a look at this interesting article explaining the differences and which one is most likely and why. Again, a must read for all Audi lovers.
The biggest issue with continuing with a V8 is CO2 emissions. Based on current regulations manufacturers are essentially tested based on their entire fleet average. This of course takes into account the overall numbers of each vehicle sold. The S4 happens to sell more cars worldwide than most people would guess, meaning putting a V8 in it degrades the overall fleet average (whereas the S5 is much more of a niche vehicle and has less affect).
Audi has therefore explored smaller V6’s for this important vehicle. Under a typical emissions testing environment a twin-turbo V6 tends to operate out of high boost for much of the time leading to very V6 like results. This is the best of both worlds – turbo charged power with V6 type emissions readings.