There were 39 historic counties.
http://en.wikipedia.org/wiki/Historical_Counties_of_England
Almost all of Middlesex and part of several other counties now forms Greater London. I do not see that region being unscrambled.
Cumberland, Westmorland and the northern part of Lancashire were combined into Cumbria. That arrangement seems likely to continue.
The Isle of Wight probably should be regarded as a distinct county. Grouping it with Hampshire makes little sense.
No doubt some counties would form groups, but not all. Cornwall for example has asked to become a region on its own. At a guess a bottom up arrangement might produce about 15 to 25 units, which does not seem too excessive for a country with the population of England.
To know for sure we would have to allow the councils to choose.
http://www.bbc.co.uk/england/radindex.shtml
There's 40 there, but some obvious potential mergers for the purposes of this discussion.
Some areas are relatively simple, but there is a large part of England where there are no obvious natural subdivisions and for historical ones you have to go back to the seven Anglo-Saxon kingdoms of the Heptarchy, before the tenth century.
The problems can be seen in the attempts by Wessex regionalists to define a Wessex region they can all agree on. Between the shifting boundaries of the historic Kingdom of Wessex, the Wessex of Thomas Hardy and the attempts of Cornwall and some in Devon to assert a non Wessex celtic heritage; the south west and south central portions of the map are problematic.
http://en.wikipedia.org/wiki/Wessex
Region (including)
There is absolutely no problem for a large island such as the Isle of Wight to be its own region.
Regarding Wessex, since the process is bottom-up, as long as the existing Cornwall county council refuses to join the rest of the Wessex councils in applying for region status, it would stay separated. Similarly for Cumbria. "It's the statue, man, The Statue."
