re: Roll into new 401k or roll into ira

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When you take it out of the 401K, you'll get capital gain treatment on the earnings (to the extent they qualify). If you roll it over into an IRA, all earning will be ordinary income.

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Capital gains really don't come into play with 401k plans unless you own company stock within the plan that qualifies for NUA treatment. Other than that, if you make pre-tax contributions to the plan all distributions are treated as ordinary income. For post-tax contributions, the gains attributable to those contributions are taxed as ordinary income.

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Roll it into a ROTH ira

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This. Unless you are in a 25% or higher tax bracket doing a Roth conversion is a no brainer. In 2010 you can make the conversion. You will have to pay income tax on every dollar you convert, but can defer paying the taxes until you file tax returns for 2011 and 2012. You will be 31 with a retirement plan that will grow tax deferred and will be tax free when you make distributions @ 59.5 yrs old.