Given the political climate, I think Republicans would do very well to nominate McCain (or Giuliani, or both as was mentioned). They are the only real candidates in the race that can legitimately claim not to be well to the right of the average American, and thus they represent the best Republican hopes for winning. Not sure about them getting nominated, though, since extremists in both parties tend to be a much larger portion of primary voters comparatively and thus have much more power in determining each major party nominee.
Hillary Clinton actually has made some progress in getting viewed more as moderate, but her name alone leaves a very bad taste in a large percentage of Americans' mouths. She'll be a tough sell even if Democrats continue to have an electoral advantage, but she's become (barely) electable in the right circumstance. Again, though, would she be nominated? Far leftists aren't very happy with her war stance, and again these are the folks that matter a great deal in the primaries.
Of course, personally I don't really care for any of these candidates, so that is hopefully a non-biased view.