A few points:
1) Talk of a Lib-Lab coalition government is vacuous - to deliver a majority it would also have to include the Scottish and Welsh nationalists and Northern Irish parties like the DUP, an extremely unlikely scenario, whilst still making concessions to the Lib Dems on vote reform - which would not be universally popular in the Labour ranks.
2) Gordon Brown has lost this election, and must go for the Labour party to stand any chance in the next election, which will probably not be delayed by more than a year or so.
3) A Conservative-Liberal coalition is also somewhat unseemly, but the fact is that a government of some kind must come from some where, and this is the only viable configuration (whether through a simple deal or a full-blown coalition) which will not create a British government held hostage to the whims of the smaller parties.
4) This election demonstrates very well exactly why a proportional representation voting system would be so undesirable - it would guarantee that almost every election would end in the kind of horse-trading that we have seen over the last 24 hours.
5) Final thought - it cannot be emphasised enough that the Liberal Democrats would be taking a substantial risk in engaging in a full-blown coalition with either of the other main parties. The Liberal Democrats have built their narrow wedge of support on being an alternative to the big two, the moment they enter into a coalition this rational will wither away.