Yes, the levees did need to be rebuilt. Unfortunately, there have been reports that they were not rebuilt well and that storms weaker than Katrina could wash them away once again.
Yes, the levees had to be rebuilt so that the city of New Orleans was not destroyed again by the next small storm that came, but a lot of people think that they were poorly built and will fail again. So far they have passed the test, but with the strong expected hurricane season coming this year it will be interesting to see if they hold up. They have been strengthened since by the US Army Corps Engineers after the original concerns of being too weak, but their quality is still in question.
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