Yes, I believe they need to expand.
Regardless of quality of football, the new Pac-10 and Big Ten would command much, much larger market shares than the SEC (the Big Ten already does). This does come back to football, though, and it stands to reason that within the next few years, the new Pac-10 matches (or possibly surpasses) the SEC in football.
I see the SEC's best options as adding Miami and Florida State (Miami doesn't add much now, but drives all sorts of ratings and revenue when they are on the up and up), which essentially puts the state of Florida on lockdown for the SEC, which would be huge for talent and nice for ratings. Then the next best options are Virginia Tech and Clemson, which gives the SEC further footholds into the Carolinas, and if the SEC were to get its own network, that could carry all the way up to DC households (remember, it's not how many people watch, it's how many households the programming is available in).
I see no value of adding Texas A&M if they don't get Texas as well, Missouri, or any of the N. Carolina schools.