Croatia have always been a big threat. Look at what they did to England in the Euro qualifiers, winning their group and knocking England off 3-2 at Wembley.
I think Croatia will make it to the semi finals. If you look at their path, they just have to play Poland (who have not been great obviously) and tie or win there, they've won Group B.
With Portugal winning (I think they have as of now) Group A, it shouldn't be that hard for the Croatian side to beat Turkey/Czech's (whoever comes in second in group A).
Portugal will play Germany, which will be an interesting game - both teams made it to the Semis of the World Cup, but obviously they're different teams now. Portugal will win not because of just Cristiano Ronaldo, but because Deco can and will control midfield over Ballack. It's pretty simple in soccer. If you can control midfield and keep the ball up, you're going to have an awful lot of opportunities and eventually score.
I think Ballack's too old to keep his side going - Podulski is nursing an ankle injury but should play against Austria, via foxsoccer.com. So I don't expect Germany to be that hard to put away for Portugal.
I'll post about Groups C and D in a sec.