Are there examples of lost works re-discovered in the modern age? Can we hold out hope that lost works such as (for example) Claudius' writings on the Etruscans and the Carthaginians, Sulla's memoirs, or the missing volumes of Livy's histories might someday be found, or are such works from antiquity likely lost forever?
(I have essentially the same question about classics from other cultures as well -- ancient texts from China, India, Persia, etc -- but I'm far less versed in those areas. Would be interested in hearing about any lost classics from other cultures that may have been re-discovered as well.)
While the contributions of Arab scholars to the preservation of texts (specifically Greek) were very real, too much is often made of them by people who aren't in Classics. Only a few classical texts, almost all philosophical and mostly minor, are known solely through Arabic copies. To my knowledge these are all translations into Arabic, and for most classicists texts are next to useless when known only through translation. Arab scholars do provide some very interesting commentaries on philosophical texts, however. But with few exceptions almost all of our manuscripts are medieval, either from the Latin-speaking west or the Byzantine scholars that preserved Greek. And I really do mean nearly everything. This does not mean, though, that papyrus finds do not exist. Papyrus fragments are among the most common finds at certain archaeological locations, particularly in Egypt, and we find fragments of texts all the time. Frequently these fragments are of texts we already know, most times they are so incomplete as to be practically unintelligible. A few texts we know only through our papyri--Sappho, for example, is mostly known through papyrus fragments, and a new poem was recently discovered like two years ago. So yes, we uncover new textual fragments all the time. Moreover, medieval manuscripts are still being discovered as well. But the likelihood of a major work turning up in papyrus is fairly slim. Papyrus texts from antiquity rarely survive in more than a few scraps, and it would take a major miracle to find a multi-book work preserved intact, a miracle that would probably affirm the existence of God for more than a few scholars. The Villa of the Papyri at Herculaneum, if we can ever read the texts there, would greatly increase the known texts in our possession, but so far all we've seen is some Epicurean stuff and second-rate verse, nothing to really get our hopes up. Papyrology is also an endangered field. It takes a lot of effort to read through papyri, for much less gain generally than an epigrapher enjoys. As a result papyrus collections like the one at Michigan or the ones at Oxford and Cambridge often contain hundreds of thousands, even millions of tiny fragments that no one has ever bothered to look at--they're delicate, hard to read, and generally tell us exactly nothing