By Kathy Finn

NEW ORLEANS (Reuters) - Residents of New Orleans paused on Friday to mark the third anniversary of Hurricane Katrina's devastating blow even as another potentially powerful storm churned their way.

City residents, many of whom are still recovering from the destruction of Katrina, now face the possibility of an evacuation order as early as Friday evening to escape the expected landfall next week of Tropical Storm Gustav.

Gustav, which killed at least 72 people in the Caribbean in mudslides and floods, could strengthen into the most powerful hurricane to hit the U.S. Gulf Coast since 2005.

Officials paused their Gustav preparations to hold an abbreviated ceremony to mark the third anniversary of Katrina with a symbolic burial service for more than 80 unidentified victims of the 2005 storm.

About 150 residents gathered in a cemetery and a lone trumpeter played a dirge as pallbearers guided a single silver casket from a horse-drawn carriage.

"We look forward to a better day, even as we prepare for a threat to come," said New Orleans Mayor Ray Nagin.

Bells rang through the city at 9:38 a.m., the time on August 29, 2005, when the city's levees began to give way. Federal officials say the levees are stronger but gaps still exist that leave some of the neighbourhoods hardest hit by the 2005 flooding vulnerable.

Katrina's waters flooded 80 percent of New Orleans, killed 1,500 people along the Gulf Coast and caused at least $80 billion in damages.