First look at your actual use of the Mega128. Did you really use 128k flash. Do you really need 4k internal RAM or all the eeprom? How many ports, timers, uarts, ADC, i2c, SPI do you actually need ? Did you use external RAM with the Mega128 ?

There are many 8051 variants. If you go for chips with the same number of pins as the Mega128, you will probably get your ports and peripherals.

The beauty of most modern microcontrollers is that you can do everything with ONE chip. Once you start using external memory, you need external support chips AND lose ports to control them at the same time.

Only you know what your application needs in resources. ARM7 chips look very attractive. Many applications will be fine with 64k flash and a fragmented arrangement of internal RAM of a regular 8051.

David.