The news that Heath Shuler will not run for the Senate is good news for Democrats, assuming they still get a strong challenger:
-The biggest reason is that it will ensure his House seat remains in Democratic hands. Although there actually is a good bench of candidates in western North Carolina who have shown the ability to win in Republican areas, you're still always safer with an incumbent. And don't forget that this is still a pretty strong GOP district- even as Obama won statewide last year he lost the 11th 52-47.
-Shuler's candidacy could have been extremely divisive within the party. If Shuler had run as the establishment candidate in the same way that Kay Hagan did last year, there would have almost certainly been a revolt from the left because of some of his recent actions in the House. That could have had the effect of either Shuler still getting nominated but being badly damaged, or another candidate being nominated too far to the left to win in a general election. Contested primaries can be healthy- Hagan was the better for her contest with Jim Neal last year- but I'm not sure this one would have been in the best interests of beating Richard Burr.
-It probably increases the chance that Roy Cooper, clearly the Democrats' strongest possible candidate, will throw his hat in the ring. Word is he didn't want a seriously contested primary and this takes the most viable other mentioned candidate out of the picture.
That's the electoral analysis, and there's also the matter that any other Democratic candidate would probably be more likely than Shuler to support the President's agenda in the Senate. I think Shuler would have been a formidable candidate but that if elected there would have been times where Democratic activists had to wonder what the point of getting him in there in the first place was.