And LiberalOasis has some nice things to say as well.

Basically, it was the economy, the fact that Cruz and Davis couldn't get their campaigns coordinated, both Davis and Arnold were centrists (so no mandate), and the personal attacks weren't effective. I think the problem with the "personal attacks" is that they came too late. Arnold was doing a terrible job of responding to them, and polls showed that they were having a real effect on his numbers.

Had the LA Times managed to come out with the story a week or two earlier, Arnold may well have lost.

One other thing, and then I'm done with this election. Arnold could not have won this campaign without the media. He got probably $100 million worth of free publicity. That only happened because it was a sixty day campaign. If this were a normal year long campaign, the media would have tired of him and started looking harder for dirt. Arnold will have a much harder time winning reelection.

He's likely going to be another Jesse Ventura. Watch for a lot of finger pointing at the legislature when things don't get better fast.