Replace any siding that is in poor condition. If it can be painted or cleaned by power washing it, then do that to limit the cost. If mold is growing on the siding, remove it using a light solution of bleach. Remember, if the prospective buyer sees dirty or ruined siding, he is going to think about all the work he'll have to do in order to make it look nice again. You want the buyer to see himself moving into his "palace", not thinking about the labor it's going to take for him to make the house presentable. You should not have to make an allowance at closing for something that could have been cost effectively and easily addressed by you, prior to the sale.