Livni now has 2 choices, opposition or unity government. As I wrote on Tuesday, Kadima made a big mistake running after Lieberman as there was no way he was going to recommend Livni. Not only did they make fools of themselves by embracing Lieberman, he still endorsed Netanyahu.
I believe that Lieberman overplayed his hand and both Kadima and the Likud are very annoyed at him. In fact, my prediction is that Netanyahu will make a government with Kadima and Shas and leave Lieberman out. Shas is a better partner then Lieberman for many reasons:
1. They have fewer seats and will get fewer ministries (leaving more for the 2 big parties)
2. Shas is not going to demand any of the really important ministries (Finance, Foreign, or Defense)
3. Shas doesn't have any unreasonable demands
4. Shas is not perceived to be so right wing (e.g fascist) and therefore it will be easier for Kadima to sit with them.