First off, i think both, Sterling and Walcott are being lured by City for their rebuild.
Secondly, Theo gets such bad rap atm, because he was just out for a year with ACL, obviously had some rusty games and is now not being used by the managed because of the contract talks. In form Theo > Sterling.
If we really are looking at Sterling, then there's no way we are (or should) be looking for a swap. Liverpool cannot come out of this with anything else other than having to buy someone new from a foreign league who will need time to adapt.
Ideal scenario would be Sterling and Walcott both to City, we replace him with Reus/Bale.