The Republicans hold the electoral votes. Currently, we tend anywhere from 279-259 without Iowa or New Hampshire, and 290-248 with Iowa and New Hampshire. If we won the 2000 vote exactly in 2008, we would come out 278-260...more than even in 2000.
If we had a good candidate, like Pawlenty or McCain...and we could pull Minnesota, Wisconsin, Michigan, Maine, New Hampshire, Pennsylvania, and all of the Bush 2004 states...and come over the 350 EV mark. If the democrats run a bad candidate, even candidates like George Allen and Mitt Romney would be able to cross well over 300 EV.
If Bush's approval ratings stay where they are, 350 electoral votes is a fantasy for the Republicans, regardless of who is nominated. Even 270 would be highly unlikely.
Of course, 2 and a half years is a lifetime in politics, so we'll see what happens. But I think it's a bit unrealistic to think that Bush and people's opinions of him won't be a factor in the 2008 election. A lot of people seem to be assuming that the election will be decided simply on the basis of the candidates involved without considering this factor.