I was expecting something close to a tie on the Democratic side. That Obama won by as much as he did caught me off guard. I'm impressed. The story on Howard Dean in 2004 was that he had these legions of young volunteers who had met on-line and were eager to help out in Iowa, and yet they didn't show up. Obama's folks actually showed up. (Disclaimer: a student of mine is there right now working for Obama and is reportedly over the moon.) I'm still not convinced Obama will be the nominee, but he's been looking good in New Hampshire lately, and tonight's win may give him a bump in terms of funding and poll support there.
I had figured that Edwards was going to win in Iowa or withdraw -- now I'm not so sure. He can at least claim that he defeated Hillary Clinton, which is pretty huge for him. But he's liable to get beat up pretty bad in NH. Clinton, meanwhile, could afford to lose in Iowa. She could potentially lose in NH and still become the nominee. But yes, it gets harder for her.
On the Republican side, Huckabee also had a surprisingly good night. Now's where the fun begins. A lot of the GOP establishment simply despises him. Now they have to crush him. Presumably, they'll do so by supporting Romney, but McCain could do well in NH, which keeps things somewhat muddied.
So, as expected, Iowa hasn't made any candidates, but it has broken several. Dodd and Biden are out. A few others may shortly drop.