I really think they need to take the IC Title off of Hardy. He's never in a feud with it because he's in the main event. Have him drop the strap to Kennedy possibly. Kennedy hasn't done much since coming to RAW. He's been suspended and had a feud with HBK. Just have Hardy lose to Kennedy @ WrestleMania and have Kennedy feud with possibly Chris Jericho. I believe that would be a nice IC feud to watch, but that's just me.
You can't have Hardy drop the belt at Mania because the rumor is he is going on to win MITB.
Furthermore, I think there are a few issues with Hardy dropping his IC title. First, this would require Hardy to lose. Now, Hardy is getting a huge push as of late, and basically owned Orton for a few weeks, and just came up short to beating him. And I think it is safe to say that Hardy is going to remain in the title picture for a while, as it seems. Having him drop his IC title cleanly would take Hardy a step back, in my opinion, after this pish he has been recieving. I mean, a man who has beat a monster like Umaga, owned Randy Orton, and then almost took his belt is now going to lose his own belt to Santino? Carlito? Definitely a step back, in my opinion.
Also, the Hardy character has this persona about him that is basically a no quit attitude. I mean, do you really think it would be in the Hardy character to drop your IC belt and then just shrug it off? Even if he is going to be in the main event picture, I just can't seem to imagine Hardy losing his belt cleanly and not trying to get it back after...
You could always have him get screwed over and lose the belt that way, but once again, I don't believe it in Hardy's character to just take that sitting down. And once again, it is a step back for him. I really think the WWE should play up the whole, duel champion storyline like they started to do going into the Royal Rumble. Have Jeff win the belt while still holding the IC belt. Then, you add more legitimacy to the Hardy character...Not only is he a daredevil, but he is also the 3rd man to ever hold both titles. In the process, you also give the IC belt a bit more legitimacy. So, in my opinion, keep the belt on Hardy for now.