With the government showing that it is adamant about clearing the bad debt off of bank's books and the housing market showing some signs of recovery, the markets are likely to begin a major improvement over the next 6 months to 1 year. If your IRA or 401k is sitting in cash, now would be a good time to start allocating more of it towards stocks. Particularly small capitalization stocks. Indexing would work well with ETF's like SPY (S&P 500 index) for large-cap stocks, and IWM (Russell 2000 index) and IWN (Russell 2000 value index) for small-cap stocks. You could also invest some money (maybe 20%) outside the US. Based on my research, I have come up with 1 country per continent that I like based on valuation, political risk, and growth. They are Australia (EWA), Brazil (EWZ), Japan (EWJ), Canada (EWC), and the Netherlands (EWN) if you are comfortable with this strategy. A good way to allocate more money towards stocks is to move a certain amount each month or 2 months until you reach your allocation.
If you want to invest in fixed income investments, steer clear of long-term government bonds or gold. If you want bonds, stick to short-term (1-2 years) or inflation-protected bonds because of the potential for inflation going forward. Bank CD's and investment grade corporate bonds would work well, too. Note that while fixed income will provide a stable return, over the next 10 years, stocks will likely outperform this asset class by a significant margin. So if you're looking to grow your money long-term rather than produce immediate income, this asset class shouldn't be a large part of your portfolio.
The current bubble in the economy is clearly gold (notice the cashforgold.com commercials on TV?). I even saw an article the other day about people having gold parties with friends where an appraiser would come to their house and buy their old jewelry. All we need now is a reality TV show about investing in gold, and the bubble will be complete.
There is still risk for the market to continue going down for another year because the housing market still has too much inventory and the government could implement trade quotas/tariffs or other restrictions, but we will most likely recover late this year and missing the train is worse than getting on early and waiting for it to leave the station.