Davis is a consummate politician who has built up a pretty good political machine. He is, by no means, a conservative. But he is a very good "Republican" who has dispensed patronage and earned the support of many local Republican candidates and parties, by going out of his way to donate to them, endorse them, etc.
While Gilmore is regarded as more conservative, it is difficult to find ,many Republican activists or leaders in the Commonwealth who like the man. He has burned a lot of bridges, and so have his some of his consultants and advisers. While he may earn a few conservative endorsements, they will likely come reluctantly. Additionally, his quixotic presidential campaign did nothing to improve his image (though one does hope he used it to acquire out-of-state donors, etc.).
(My sources tell me former Governor and Senator George Allen may very well run for Governor, but not for Senate. Additionally, it is highly unlikely Tony Snow will run for this seat, though that certainly would be a welcome entry).
Regardless of who wins the GOP nod, popular former Governor Mark Warner (no relation to John) -- should he get in the race -- would be tough to beat. This seat is currently in jeopardy.