It is way too early to say that. Davis is still the most dangerous Democrat in the state. He has won 5 statewide elections by going negative on opponents and has demonstrated that he is fully prepared to chop-block fellow Democrats (such as when he went after Feinstein in, I believe, 1992) in order to win. Given Davis' proven success at taking apart both Republican and Democratic opponents, it makes good sense for McClintock to stay in the race so that Davis can't focus all of his fire on Arnold.
In fact, I would go so far as to say that Arnold is actually being helped right now by McClintock remaining in the race because Davis is being presented with multiple targets that he is going to have to hit in order to prevail. Davis is reluctant to do this because (as even Lockhart has opined) he knows that going negative on multiple targets will lead to a backlash. However, if Davis has just one Republican target to go after, he is a cunning enough politician that he just might prevail.