As I wrote yesterday, it's virtually certain that there is going to be a special election to recall California's governor, Gray Davis. Taking that as a fait accompli, both the Democrats and the Republicans are in panic mode trying to figure out how to play the cards they've been dealt.
Democrats: The Democrats are in a tough position. They have two options: 1) give all the party's support to Gray Davis and try to prevent him from losing the recall vote; 2) ditch Davis and give all their support to a different Democratic candidate. If it were obvious that Davis is going to be recalled, option (1) would probably be the way to go; the Democrats could lay all the blame for the economy squarely on Davis and sacrifice him on the politlcal altar. Since I do think it's inevitable that Davis will be gone, I think this option is the Democrats' best hope for holding the governorship. On the other hand, if they think that Democratic voter turnout will be high enough and strong enough to prevent Davis from being recalled, then they'll probably go with option (2). This would allow the party to avoid accepting any blame for the financial crisis, and would avoid a major split between Davis supporters and the rest of the Democrats. A 3rd option would be a mix of (1) and (2), but I don't see how the Democrats can support both Davis and another candidate; "Vote not to recall Gray Davis! But, if he is recalled, vote for this guy!" Unfortunately for the Democrats, California Code 11381 (c) prevents Davis from running as a candidate to replace himself.
Republicans: The major challenge facing the Republicans is to put their focus on one candidate. There's no primary, there's no straw poll, so the various [potential] Republican candidates will need to agree among themselves on how to winnow the field. In big-ego politics, that won't be an easy thing to do. The Republican party can limit itself to supporting a single person, but there's nothing to prevent Arnold or Bill Simon (sigh) from running with their own money, for example. The recall election gives the governorship to whoever wins a plurality of votes, no matter how small that plurality is, so if the Republicans split the conservative vote 2 or 3 (or 5) different ways it's likely that Davis will be recalled and replaced with some random Democrat.
I expect that the election will hinge on these organizational issues, even more than on the campaigns themselves.