There is no question the Dems are fighting an uphill battle, mainly due to their inability to vocalize their stance on anything prior to this point. You cannot win elections by just saying "yeah, well the opposite of what he/she said." The Dems have also not done themselves any favors by just opposing anything put forth by the Republicans.
When there is a problem, you need to take a stance on a solution. It might not be the best solution, but you have to at least put something forward for the electorate to chew on. The Dems have not done that. They just say, "Republicans are wrong" and leave it at that. If you want more Dems in power, the Dems need to show that they have ideas and solutions to the problems. Then, you campaign on those solutions stating that "We could not impliment these solutions because the Republicans blocked them. Help us get more Dems in office so that we can get these ideas enacted." Of course, once elected they will probably ignore these solutions, but at least they provided something for the electorate to vote for, not "vote for me because Republicans Bad."
As OGT mentioned, there is no way to tell the impact of the war on the election. If the Dems do not take a specific side, then they have muted the effect of the war on the election. You need differing views in order to make it a focal point. Dems should stick to domestic issues. What is their plan for Social Security? It is broken, what are they going to do to fix it and how quickly? What about Medicare? Welfare reform? Tax relief? I haven't heard anything on these types of issues from the Dems. Just opposing whatever the Reps put forward.