I have a friend who lives there, and she says that right now there's a stalemate. The government is no longer repressing protesters, but neither are they willing to meet their demands (monarchy giving up authority to rule, new constitution, political prisoner release, among other things). The protesters, despite being a few different groups seem adamant that nothing less than those conditions can be the basis for talks to start.
A stalemate favors the monarchy. Protests have been going on for weeks now, and people are getting weary of marching and sloganeering. I wish I could see a solution for them.
A good blog from Bahrain for the latest news is
http://mahmood.tv/">Mahmood's Den. Though he is a native Bahraini, he writes the blog in English.