When Jen and I were watching the NH results at the gym yesterday, the Hillary camp was effusively ecstatic over their upset (at least versus the polling predictions of the leading 2-3 days). Sure, they were supposed to lose (potentially double digit, even accompanied by rumors of exit strategies), and so they do have something to cheer about.
However, she only won by 2 points. The issue is that the polls (taken with a grain of salt, given their failure to foresee her win last night) show that Edwards voters would overwhelmingly end up in the Obama camp if Edwards were to drop out. Edwards had 17 points last night. Had it been a pure Hillary/Obama head to head, this would suggest that Obama would have walloped her.
Iowa showed that not all women are blindly lining up behind Hillary (Obama beat her among women in Iowa). Absent that giant guaranteed block, Hillary would be in deep trouble if Edwards realizes the futility of his populist crusade (however inauthentic).