Two big problems for Bush:
The economy isn't in better shape than when he came in. The markets are still down (killing SS privatization) and unemployment is up. The tax cuts are good but not being played up enough.
Many people I know consider that the war on Iraq drew resources away from the war on terrorism. They were saying this long before the attack on Iraq. Ben-Laden is still at large; Al-Qaeda is seen as stronger than ever; Iraq is seen as another quagmire.
Of course, "Kerry isn't Bush" may not be enough to win; it's a good start though.
I understand you're saying that people you know hold these positions, not that you hold them.
I myself hold neither of them. Al-Qaeda is weaker than ever, IMHO, and will soon be even weaker if Allawi handles Fallujah correctly. I never thought al-Qaeda was very strong to begin with, I admit. I've long looked at the 911 success as something of a fluke, and I take al-Qaeda's inability to mount a follow-on attack in almost three years as proof.
Iraq might sour, but I doubt it would ever reach the proportions of a quagmire, a term too closely associated with Vietnam to ever apply to Iraq, since the military situations in the two countries have literally nothing in common.