Since the Civil War, the only men to be nominated and win after losing a previous election are Grover Cleveland and Richard Nixon--and Cleveland is a special case since he was a former President who had been defeated in a close election while getting more popular votes than the winner.
Kerry might want to encourage speculation about a possible second try to enhance his standing in the party, and to discourage Teresa from thinking of dumping him. If he were to win in 2008, he would be the third-oldest President ever at his inauguration (after Reagan and William Henry Harrison).
I think the d's should nominate Jimmy Carter. He's still got a term left.