@Justin,
Palin won. Clear win for her. Not to say she should have won, but she did. Expectations were low, she was folksy and charming, and not a single gaffe. She was going to win without a gaffe.
Personally, I think Biden was far better than Palin. But that is irrelevant. A reasonably informed voter with an ear for consistency and sanity is a long way from the average voter who reads two books a year - and only if you include Harlequin romance novels.
Bad news for Democrats? You bet. However, looking at the electoral match up, I wouldn't advise any serious worry just yet. McCain lost his debate, reminding everyone of that sweet old grandfather who was just too old to make sense for more than thirty seconds at a time. You love him, but this is a man you hardly trust to drive anymore, much less keep nuclear launch codes.
As long as unemployment stays relatively high, as in not falling below 5.5%, Obama wins this election. So good news for Democrats - unemployment is way too high to drop that low in such a short period of time.