Looks like the Democrats won control of the House, which does not surprise me. They need three more seats to get the Senate, and with only four toss-ups less, I think that's unlikely. I can't remember a divided Congress in my lifetime, although I'm sure it's happened before (I would guess not for more than two years at a time, however).
If these results hold up, my sense of politics is that Democrats did not win tonight; rather, Republicans lost. So Democratic gains this election cycle are by default, by being the other party. I don't get a sense that the electorate likes Democratic ideas, but clearly they are unhappy with Republican actions. I don't think Iraq is the only issue: I think Republicans would still be in trouble this year without Iraq, although probably to a lesser degree.
What that means, if I am right, is that Democratic control of the House rests on...pretty much nothing. Just an absence of Republicans. The GOP still has more and (I think) better ideas than the Democrats: if they can learn from this loss to stick closer to their ideas---and ideals---then it's quite likely that they can win back the House in 2008.