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Hello,
we are about to trade up and like the Kia Sportage diesel. Quandary: buy 2008 model with reasonable km (60000km) for $20000 or go for new at $40000 + 5 year warranty/road side assist etc. What do we base our decision on?

Kia is a brand that has vastly improved over the years, and the new Sportage is a truly great vehicle. However, the further you go back in years, the less this applies.
The 2008 Sportage is the old generation 2 model, where the build quality and safety features were nowhere near as good as they are today. Also, a 6 year old vehicle with 60,000km on the clock has already had a reasonable amount of use and unlike a new one which has a manufacturer's warranty, if anything should go wrong a little down the track, you are on your own and will need to foot the bill.
If your budget runs to a new one, that's definitely the way to go. You'll be getting a much better vehicle with more features, higher safety levels, a 5 year warranty as well as all the other benefits of having a new vehicle, not to mention the pleasure of driving out of the dealership in a brand new vehicle!
I'm not sure that $40k would get you into a brand new Sportage Diesel though, as they start at around $44k, with petrol models starting sub-$40k. However, perhaps you could work a deal or even look at an ex-demonstrator?

Thanks very much