I totally see why people don't want Karen to retire - she has sparkle, a great sense of fun and is a fantastic dancer. However, as a mother myself, I know how quickly the early years of your children's lives go - you have one shot at it, so you can't afford to miss it. Her baby is quite small, and she may well want to have more children. It's a huge ask of anyone to make the sort of sacrifices to their family life that a show of this nature entails.
Having said all of that, I think she should definitely have some sort of a role in future series, if not the high pressure high time consuming job of being a contestant. I think she would make a great judge - but I wouldn't want to get rid of Craig, Bruno or Len. Arlene is going a bit far this series so if I had to sacrifice anyone it would be her - I think Karen would do a much better job and be much more constructive.