Ilya Somin lays out the options for the future of the libertarian-conservative alliance at Volokh Conspiracy, in light of the fact that the "Bush years have severely strained and perhaps broken the conservative-libertarian political coalition.":
Obviously, a lot depends on what conservatives decide to do. If they choose the pro-limited government position advocated by Representative Jeff Flake and some other younger House Republicans, there will be lots of room for cooperation with libertarians. … Conservatives could, however, adopt the combination of economic populism and social conservatism advocated by Mike Huckabee and others. It is even possible that the latter path will be more politically advantageous, at least in the short term.
Much also depends on what the Democrats do. If Obama opts for moderation and keeps his promise to produce a net decrease in federal spending, a renewed conservative-libertarian coalition will be less attractive to libertarians.
Go join the very lively discussion in the comments over there, or extend it right here. Can libertarians and conservatives still be friends?