Just to add to that, it also depends on where that loss of support is coming from. Are we talking about moderate conservatives who were supporting the democrats because they thought the republicans were moving too far right who now think the democrats are moving too far left, or are we talking about people on the left who think the dems are moving too far to the right? In the former case it might be a problem for the democrats in 2010. In the latter though, it might be a problem for the democrats defending their seat but, if they can't hold theit seat, odds are it'll still be a democrat that replaces them in the primary not a republican in the general election. One also has to remember that it's not like the republicans are making any progress in people's minds. Most still think the democrats will do a better job. The election is still over a year away, so it's really too soon to make any predictions. Anything can happen.
I wouldn't be suprised if in the next few years we see the non-neocon republicans and the "blue dog" democrats splitting from their respective parties and forming a new political party that ends up replacing the republicans as one of the "two parties" while the current republican party becomes a fringe party. Though maybe at this point this whole "it's a 2 party system" nonsense is too engrained in people's heads for something like that to happen again. Though the whigs and federalists may have thought the same thing there.