Note: I have wrapped the following in a package restart-emacs available here.
Here is an alternate way to achieve what you want using pure elisp (not really since you rely on a shell). The trick is to spawn off another emacs process just before current emacs is killed.
(defun launch-separate-emacs-in-terminal ()
(suspend-emacs "fg ; emacs -nw"))
(defun launch-separate-emacs-under-x ()
(call-process "sh" nil nil nil "-c" "emacs &"))
(defun restart-emacs ()
(interactive)
;; We need the new emacs to be spawned after all kill-emacs-hooks
;; have been processed and there is nothing interesting left
(let ((kill-emacs-hook (append kill-emacs-hook (list (if (display-graphic-p)
#'launch-separate-emacs-under-x
#'launch-separate-emacs-in-terminal)))))
(save-buffers-kill-emacs)))
The code to start a GUI version of emacs is straightforward. The code to start emacs in a terminal is a bit tricky. It uses the fact that you can pass a string to suspend-emacs which would be passed as terminal input to the parent process (the shell). From the documentation
(suspend-emacs &optional STUFFSTRING)
Stop Emacs and return to superior process. You can resume later. If `cannot-suspend' is non-nil, or if the system doesn't support job control, run a subshell instead.
If optional arg STUFFSTRING is non-nil, its characters are stuffed to be read as terminal input by Emacs's parent, after suspension.
So we basically suspend emacs just before it is killed tell the parent shell to resume currently suspended emacs (which is going to exit soon) and then launch another emacs process. Note that this does not work on platforms on which terminal emacs can/does not actually suspend but starts a subshell, for example on windows.
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