No matter who the Democrats nominate they are unlikely to lose any of the Kerry states. Hence the Democratic nominee only needs OH. Given the current melt down of the Republican party in OH, I think any generic Democrat will beat any generic Republican.
The only exception would be McCain v Hillary where Hillary distain will likely give McCain the edge.
However, if the Democrats win the House (which I think is highly likely) and they can be tagged by the Republicans as do nothing, partisan, obstructionists, the Republicans will have a better chance in 2008.
The Republican Senate was able to pourposefully schedule votes for the sole porpouse of hurting the Kerry campaign.