I have talked about this a few times actually. The biggest problem with the GOP right now is the people who are talking for the GOP. Every time Rush, Coulter, Steele and Palin open their mouths, they say something either so stupid, or so inflammatory, that they turn off people. So step one would be get some actual effective party leaders.
Secondly, stop with the over the top rhetoric. The GOP is most effective when they stick to simple, straightforward political messages. I forget who it was standing at a podium with the stimulus bill, saying that no one had read it all, and yet they had to vote on it. That was effective.
lastly, instead of just being anti-democrat, really put forward your own proposals, and work to publicize them. When Steele is asked what the republican plan is, and he says he does not do legislation, he just makes you all look silly. When the house senator from Michigan(I forget his name) is on MSNBC talking about a health bill he was working on, and offering concrete proposals, he came off as effective.
The problem I see with republicans as far as elections is not their stand on issues as much as their presentation.