As se5 says, the likelihood of a General Election on the same day as the local election in 2010 - for the first time in Lambeth I think (or at least since the end of the metropolitan boroughs) - should make things interesting.
Looking at general trends I would say that there are two certain changes - 2 Green gains in Herne Hill (from Labour) and at least 2 Conservative gains in Clapham Common (from Lib Dems) with the third dependant on the Labour councillors' decision to restand. That would leave Labour on 35 councillors and needing to lose at least 4 more before the Council went to No Overall Control, which isn't outside the realms of possibility.
At the moment my hunch is that Labour will hold on with a reduced majority, but acting as devil's advocate to se5's points...
1. Incumbent Labour have had an astounding ability to 'lose' Lambeth in recent years and because they're seen as the natural party of power at the Town Hall it's more difficult for opposition parties to prop them up when they lose control. This is true if you look at Town Halls of any colour when the incumbent no longer has a majority. It happened in 2002 and would be difficult to see that change if the borough went NOC next time.
While Labour wins the largest share of the vote (35.6%), it doesn't have an outright majority. If you consider the share of seats from a proportional representation perspective, Labour benefits disproportionately at the expense of Greens (in particular - they had a 15% vote share but one councillor) and Conservatives (with 17% for less than 10% of councillors).
I thought the most interesting thing about the 2006 result was that Labour's vote went
down 1% compared to 2002, but they
gained 11 seats. This was achieved by focusing on key marginals (i.e. Princes, Knights Hill and Stockwell) rather than piling up votes in safe wards (i.e. Tulse Hill and Ferndale), as page 45 in
this report demonstrates.
2) The higher turnout for a General Election should benefit Labour at a local level. However, previous Lambeth local election results and the Mayoral results earlier this year show that many voters are savvy enough to split their votes between ballots to achieve a specific outcome. They also cast votes in some ballots and not others. Whether that happens in 2010 will depend on the presence of 'local' issues that prompt voters to vote for different parties.
3) Can't argue that increased Conservative support would not result in a net benefit to Labour at the expense of Lib Dems. That happened to a certain extent in 2006.
4) The existing MPs - and Chuka in Streatham - will undoubtedly campaign on their local credentials more than any time since 1997. I can't imagine there will be many pictures of Gordon Brown on election leaflets. Likewise, their opponents will do exactly the opposite and try to connect them with the unpopularity of the Government. Harder in the case of Chuka Umunna and Kate Hoey, but quite easy in the case of Tessa Jowell.
But would people who vote for Kate Hoey necessarily vote for Labour councillors? She couldn't be described as the administration's most vocal supporter and arguably benefits from outspoken comments about the Council.
5) Agree the Greens are unlikely to make gains outside of Herne Hill, but not convinced their vote necessarily splits the anti-Labour vote.
7) Labour has frozen council tax, but they have also increased charges on a wide range of services. There has been a big rise in care charges for the elderly, who are more inclined to vote. The cumulative effect of each issue won't necessarily cancel out any 'feel good' factor from the council tax freeze, but will reduce it.
8) Labour has already sent out rent bills with this year's increase - and handled it badly IMHO. If the Government provides extra funding I'm not convinced the Council would gain from any subsequent goodwill.
9) Labour benefited from resources in 2006 that won't be available to them in 2010 when a General Election will require resources to be spread out across the Council.
The key to Labour retaining control of the Council rests on learning the lessons of 2006 and focusing on holding on to those key wards rather than repeating the mistakes of 2002 when they tried to win 40+ seats.
Insults? 
