Racism is everywhere, but it's important to note that Obama's percentage wasn't much different than Kerry's, so I don't know how much race actually factored in.
Except while the Democratic vote jumped 5 points nationally from 2004, it dropped a point in WV. Its tough to argue the whole "that region just doesn't like liberals and leftie social views" when John Freaking Kerry did better there before voters were fed up with Iraq and the economy was crashing. I hate to say it but I'm having trouble finding an explanation beyond race. WV's economy, and thus its politics, have been shifting away from union power as Al explained, but was there that much of a watershed just between 04 and 08?
The only other theory I can come up with is there were infinitely more bad rumors about Obama (Muslim, foreign born, terrorist sympathizer, etc) than Kerry (he got slimed by the swift boaters, but otherwise not a victim of rumors), and that played better to WV voters than elsewhere. Sadly, I'm not sure how much a compliment it is to say they're not racist, but rather incredibly gullible towards whatever they read on the internet. 
Racism is most likely part of the answer, but it's also worth noting that WV seems to be pulling a slow-motion, reverse VT. 1988 was the last time it did not trend Republican from the previous election. Even if Dukakis were indeed boosted by a Republican scandal, it seems a little odd for him to fare better relative to the national average there than Bill Clinton.
