I have previously argued that it might be good to keep Magneto alive in X3 so there is continuity between X3 and the Magneto spin-off (which is bound to feature McKellen in some form, even just as a voiceover).
However, I think it could also be good if he died in X3, then Moira MacTaggert could clone him from the tissue and we'd get a younger version.... (I've borrowed elements of this from the comic storyline in which he was reverted to infancy by a mutant he created, raised and genetically modified by Moira, then brought back to a younger adulthood by Shi'ar agent Erik the Red)
Without being cruel, McKellen does look very haggard in some of the shots (the prison scenes especially). Surely he can afford surgery to remove those massive eyebags!
And the hair needs something done to it. Magneto's comicbook hair is white and wavy... McKellen's is grey and the wrong sort of wavy. It needs to be more like the comicbook version, or cropped into a sharper crewcut style that helps McKellen look younger and more dynamic.
Hope all that didn't sound mean.. Magneto is actually my favourite character and the movie version has been excellent. For the 'comicbook costume lovers', he's had the most accurate costume of them all... and his power displays have been impressive and very well done (except the raising of the cop cars in X1, which was done too casually and made them look obviously yanked in the air by a crane... it needed the 'humming' magnetic-pulse sound that is usually put over his power displays, and to be done more slowly and deliberately).