Labour won. Everyone thought they would. They improved on their general election victory by over 10%, even though they were running a little known candidate. Elwyn Watkins- the Lib Dem who triggered the byelection by chasing Labour's Phil Woolas through the courts and out of parliament- improved his share of the vote by a measly 0.32%. The Tories, who fielded a candidate who moved and spoke as if he were being worked by remote control, did really, really badly.
Voters use byelections to punish the government of the day. If the Lib Dems weren't completely wiped out it's almost certainly down to the tenacity and vigour of Elwyn Watkins who, by the end of the campaign had achieved such brand recognition that he dispensed with his surname and was appearing on the posters as Elwyn, pure and simple. Maybe next time round Nick Clegg will reward him with a safe seat- that is, if there are any left by then.