Workplace environment for motivated, creative staff?

Hi. I’m an Application Development Manager who has experienced a number of resignations over the last few months. I’ve been at the firm 3 1/2 years and feel that morale and interest in the business is at the lowest point yet.

My question really is this:
In a development environment where we are not using cutting edge development tools (Main tools are VB6, SQL Server 2000 with some .Net) what is the best way to keep staff interested? We have a huge amount of work to do and evolving the tech is not something that is easy to do. So, I’m thinking specifically of the environment. Casual Dress? Home Working? Games console in the corner of the office? How about office layout?

Welcome your thoughts! Thanks – Rich