Why not doing both? Develop new content up to a point where you are satisfied with the state of the game and than use one development cycle to make something like an intermezzo where you polish early chapters. Maybe while doing that intermezzo you will get new ideas for the whole game as well. As an "older" player I wouldn't mind something like this.
He can only do one thing at a time. While he can do both sequentially, the amount of time he spends on revamping old content can instead be used to develop more new content. This is a matter of choice, but I prefer new content.
This is almost a philosophical question. I have limited time to invest in each version, what percentage of it do I invest in brand new content and what do I improve existing content? Obviously I want my game to be awesome all around but if I retro-animate all existing scenes I won't have time to develop new ones.
Solutions to this problem could be to either ignore the older scenes and focus only on new ones or do the opposite, dedicate one version to "facelift version" where I take the time to focus mostly on animating existing scenes. A "golden path" solution will be to mostly invest in new animated content and try to animate an existing scene or two on every update.
I think focusing on the new ones is better. I, for one, would like to see the "end" of the story sooner than later. Perhaps you already have the ending planned, and it's only a matter of time before we see it, but I think the pacing to reach the end is important. It is common for writers to plan the beginning and ending of a story before they fill in the middle, but if it takes too long, then it feels stretched out.
If you think of your releases as books, then I think it's easier to understand why the released ones should be kept as they are. It's the same for game developments too. Often you can notice that the early levels are indeed much simpler than the later ones because the developers had less experience in making them, but that's fine.
I think if you happen to come up with new ideas even after you reach the ending, you can write a sequel and apply them there, which happens with a lot of games too in their DLCs or sequels.
If you don't mind my criticism, I think right now the story is already a bit stretched out, because the story in each fiefdom has little to do with Karder's upcoming conquest of the other continent. I mean yes, I understand Karder is conquering more lands and eventually he will go for the other continent, but take Game of Thrones for example. I don't know if you think it's a good story or if you have watched/read it, but still, when Daenerys could potentially bring the Dothraki Horde to Westeros through her marriage, it scared the hell out of everyone because they had never faced such a huge amount of cavalry in Westeros, not to mention the dragons later on. And then Daenerys would go on to find a fleet that could carry her armies to Westeros, and to seek loyalist allies in Westeros.
I mean, you know from the beginning that Daenerys planned to reclaim the throne, much like Karder does, and her every action was specifically tailored for that. I understand this is a porn game, but still I wish the women were more relevant to the central plot.