While Bush's approval rating is in the tank, it's worth noting that the Democrat Congress is extremely unpopular, too.
While Iraq is always an issue, most likely, this has to do with their inability to keep campaign promises about spending and corruption. Ken Blackwell has a good column out on Waging War on Earmarks. As Blackwell notes:
If the Democrats don’t reverse their course, their congressional reign will be short and their nominee will fail. And if the GOP proves it’s serious about fixing our nation’s spending problems, they will be back on track to regaining the voters’ trust.