The idea has come up before, but I too have felt the need to "start over" in terms of a conversation class.
So I have a two-pronged attack. The first is to teach English using role-plays and simple games involving repetition of conversational phrases.
I've attached one lesson from this prong, Hello-goodbye, which has three games in it (simple games I invented, based on things I've seen here) sprinkled throughout. When teaching, I would skip one of the first two games, depending on the student energy-level and time. It also has a number of dialogues.
There are lists of ways to say hello and goodbye, and I demand that each student choose one to remember (and not "hi!"). Then that becomes their personal greeting that I want to hear in the halls. Similarly they choose an answer to the question "how are you" from the choices given, and keep it in mind for the last activity. If the class is small enough you can talk to them individually and find out what they've all chosen.
There is a joke, which my students liked. When you instruct the proper pronunciation of "Yo, wazzup!" you explain that they must hold their hands like so and stick out their tongue and shake their heads.
When I explain "I'm fine" as a polite way of saying "I'm down," I likened it to smiling while sad so that one doesn't make others sad.
I've already made but not yet taught the second lesson in this prong, being "small talk," where I teach/review some questions and answers about weather, family, and "interests" (video games, movies...) and then we practice in a similar way. It builds on the hello-goodbye lesson.
The other prong of attack is more experimental: I plan to tell my kids stories. Early tests are positive. Today I spent the last ten minutes of class successfully telling a story and then discussing it. They paid attention throughout! It was amazing.
I thought the idea of story-telling-as-TESL was mine until I found this guy's website. He has some excellent ideas and a good collection of stories.
http://andrewarticlesandstories.wordpress.com/