It's a travesty that the press is uncritically regurgitating the notion that Bibi has a higher chance of forming a government than Livni. This is not at all true when one looks at the numbers, even if they change by one or two seats in favor of the right-wing after the soldiers' and absentee voters' ballots are counted.
Although Netanyahu has been arguing that he won a decisive victory, I don't think he is thrilled about forming a far-right government. He knows that this will cause him a lot of problems on the international stage, which will in turn impede his ability to advance his policy aims. Furthermore, he would need both ultra-Orthodox parties to form the "nationalist" government that so many people are dreaming about.
Here is what such a coalition would look like:
Likud + Yisrael Beitenu + Shas + Jewish Home + National Union + Torah Judaism
= (27 + 15 + 11 + 3 + 4 + 5) seats
= 65 seats [out of a total of 120]
That's a very weak government, considering that it commands just 4 seats more than the minimum. Plus, can you imagine the headaches with Shas, the Ashkenazi ultra-Orthodox, and Lieberman all in one coalition?
Both Shas and Yisrael Beitenu have been posturing that they would prefer a Netanyahu government. There is bad blood between Shas and Livni, so perhaps Shas will under no circumstances sit in her government. But Lieberman's public expressions of support for a Netanyahu government should be read as attempts to strengthen his bargaining position vis-a-vis Livni. The same of course goes for Barak's remarks about Labor returning to the opposition. Nothing is a given. Neither Kadima nor Labor have any compunctions about sitting in a government with Lieberman. Moreover, Shas and Yisrael Beitenu would probably be willing to bury the hatchet, at least temporarily, if the right conditions are met.
There is thus a distinct possibility of a Kadima + Labor + Yisrael Beitenu + Shas coalition
= (28 + 13 + 15 + 11) seats
= 67 seats.
As always, the remarks to the press and leaks by the various candidates and their parties should be viewed with a great deal of skepticism. As much as certain candidates may insist that they will never sit in a government with X or Y, or that they would never consider conceding on issue Z, everything is up for grabs.