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I'm far from convinced that Lieberman is really planning on running for reelection in 2012. His actions are simply not consistent with a strong desire to remain in office.
But Blumenthal was sure to run against him. And if he did I can't see where there's any way Blumenthal would not have crushed him. As we can see from today's numbers, Blumenthal is very popular with Connecticut Democrats. And since he's polling around 60%, he's popular with a lot of independents too. So he would have taken the Democratic nomination (see this poll to see why that is beyond Lieberman's reach now) and eviscerated Joe in the general. I think Lieberman's only real course to reelection is to run as a Republican, get lucky and draw a weak Democratic challenger and pull out a squeaker. Conceivably he could run as an independent, with tacit support from the state GOP and win that way against a weak Democratic contender. Mind you, I'm not saying that's likely. But he has a much better chance today than he did yesterday.