Portugal...as much as it is my country, I don't think we have nearly as half as the quality we had 4 years ago when we reached 4th place. We'll barely manage to cling on to 2nd in the group stage (Brazil will get 1st), and then go down in the quarter finals after a win in the round of 16 against a weaker team. At least that what I think. Figo and Pauleta were one of the world's best players, with then gone, and Ronaldo absolutely sucking (Ronaldo = Maradona - they both are amazing, one for R.Madrid, other was the best player in the world, but now they both suck at national teams playing/coaching), we won't go far.
Italy is my choice, once again (ok, probably biased since I'm half Italian). The team is strong, focused...ultimately, a powerhouse. We have tons of difficulties, sure, with the story of defending the title, and winners curse probably is going to knock us out like it did in Euro '08, but I believe that we can at least reach the semis. Would be awesome to reach the finals and win again, though.
Possible candidates to win (apart from those mentioned above):
Spain - awesome team, really got stronger.
Germany - cold-blooded, focused consistency of a "sniper" team
Brazil - ain't 5 time champ for nothing, plus great players and natural dominance
Argentina - if Maradona doesn't go crazy with bad tactics
France - good team, not the best, but still very focused
South Africa - the host will go far, trust me. It happens like that every time (though not WIN, but like..quarters)
Holland - like Germany, although their football is a show to watch. Nothing can stop them when they put their hearts into it
England - if they get their heads together and realize that it's not a walk in the park