With Sharon leaving Likud, yet another Israeli government will end before its time. In fact only one government has ever completed its four year term, the first Begin government (1977-1981).
What do new elections portend for Israel? Well, the system is broken that's for sure. It lacks stability and grants too much power to minority parties. The US' winner-takes-all system is better suited to deal with diverse populations because it forces the politicians to compromise on key issues.
How will the new Sharon party do? Well it seems. Sharon is the most popular politician Israel has seen in years (maybe decades). He accomplished the impossible, getting out of Gaza, despite the internal pressure in his own party. Sharon is an excellent politician who has moved to the center in his old age. With Peretz heading Labor and Bibi probably running the Likud, the two traditional parties will move farther to the extremes and the void in the center will belong to Sharon. Shinui, which used to occupy the center (or purported to), will be relegated to the margins, as only the strict anti-establishment and anti-religious will vote for them.
I have a feeling that with Sharon's name, the parties' centrist positions, the extremism of the large parties, and the big names, Sharon's party will win big in March. Personally I hope they adopt Bibi's economic free market policies, which can only help the country. But either way this is a victory for Sharon.