Will the Democrats -- the President-elect and the House and Senate -- be liberal Ted Kennedy Democrats, or moderate Bill Clinton Democrats? That, it seems to me, is the main question.
I was no fan of Bill Clinton, but I was no great detractor of his, either; I think he was a smart guy and a pretty good President, especially when his private appetites didn't interfere with his public policy. He got welfare reform through, he was good on trade, and in general was pretty good as far as his domestic policy went. (In post-9/11 retrospect, we see the flaws in his foreign policy, but we see the same with regard to the pre-9/11 George W. Bush; both parties were no great shakes as to foreign policy in the immediately pre-9/11 era.) If the Obama Administration implements Clintonesque policies, I wouldn't be that worried. If it implements Ted-Kennedy-like policies, I would be worried.
Here's why I think the Clinton option is more likely: 1994, or to be precise the Democrats' awareness of 1994. Remember that in 1992, the Democratic Presidential candidate beat the Republican by 5.5%. (I realize Perot was something of a confounding factor, but it was clear this was a solid victory for the Democrats.) After the election, the Senate was 56-44 (without the shift in the Democrats' favor, but that shift had happened just a few years before). The House was 258-176 (with a slight shift against the Democrats, I realize), and a raw percentage of 49.9% to 44.8%. The Democrats were solidly in control, more or less to the same extent they are now. And then two years later, despite a good economy and no foreign policy problems, they lost both houses.
The Democrats, if they're politically savvy -- and I'm pretty sure they are -- realize that this could happen again in 2010. And this is especially so because of the extraordinarily high turnout this election: In 2010, many of the new voters from 2008 won't vote; it will be a midterm election, the charismatic Obama won't be on the ballot, and we'll be back to normal politics.
My sense is that the Democrats will govern with an eye towards that. Obviously, this gives an extra incentive to do things that are seen as helping the country as a whole, both in domestic and foreign policy. Nothing succeeds like success. If their policies are seen by the country as working, and as compatible with the values of the center as well as of the left, the Democrats will win in 2010 -- and they'll deserve to win.
But the prospect of the 2010 election, in front of a very different-looking electorate than the one that voted in 2008, also gives Democrats an incentive to be relatively moderate, and to avoid both risky gambles and political programs that are seen as benefiting the Democratic base (either materially or symbolically) at the expense of the center.
"The Australians, not content to dive in the ocean deep with a mere shark cage, have taken to hopping in the water with 19.6ft long salt water crocodiles using nothing but 4cm of acrylic plastic to keep them safe. As the croc gnashes its teeth against the cage, you piss your pants, the wife takes some pics, and we once again reaffirm why dolphins are actually the dominant species on the planet. 
