But timing could be an issue. If she makes this decision in the summer of 2012, this would be a major campaign issue. And politics could actually influence Obama to pick somebody more moderate, so as to avoid a huge Supreme Court confirmation battle right before the election.
Since there are 47 Republicans, and still a few more moderate Democrats in the Senate, some of whom are up for re-election in 2012, Obama might have a huge fight on his hands if he was trying to nominate someone who was very very liberal. Just saying that this could be a political headache if it happens in the summer of 2012.
She might retire after the election, and allow Obama to try to push through a successor in the lame-duck session. If Obama loses in 2012, chances are the Dems would have lost more seats in the Senate.