Angelika We've been following the discussions between representatives of the two major German political parties, CDU and SPD, who have been addressing the issue of dual citizenship in their coalition negotiations recently. They finally agreed in their coaltion contract, that descendants of foreign immigrants in Germany now have the right to dual citizenship. This obsoletes the so-called "option model", which defined that children born to foreign parents in Germany needed to decide on or before their 23rd birthday on which citizenship they wanted to obtain. Developing this idea further, many Germans living abroad in the U.S. were hoping to be able to obtain dual citizenship as well.
But that might have been a short sighted thought, as political talking heads back home won't gain much publicity by addressing the needs of a few folks living abroad. Current regulations say that if Germans want to become American citizens, they can keep their German citizenship only if their previously filed application to keep the German citizenship has been granted by the German authorities. They need to prove that although living in the U.S., they are maintaining ties to Germany. A few of our aquaintances in San Francisco successfully pushed through the process, but it's really up to the German authorities to grant or deny the request.
To be fair, there's no U.S. legislation dealing with dual citizenship either, although rumors to the contrary keep floating through the media. There's simply no regulation for naturalized citizens with regards to their original passports, and for this reason, it's okay for new U.S. citizens to keep their original citizenship, as long as it's legal in the country of their origin. If you have any doubts, you can read up on the topic under Dual Nationality on the Department of State's official website.