Everyone is looking for sexy romance -- sexy paranormals, sexy historicals, sexy contemporary, etc, etc, as well as erotica. Conversely, inspirational romance continues to do very well and the market is still growing. There seemed to be more interest in historicals than in previous years, even western historicals, as long as they're sexy. Jennifer Enderlin of St. Martin's is looking for a very sexy western and I heard of an author selling an erotic western historical to Harlequin's new Spice imprint. Paranormal stories are still in demand, though most editors professed to be interested in something other than vampires.
Let's see. Prairie Fire is not erotica, although I think it's fair to say that it's sexy - awards for best first kiss scene and best overall scene (for which I entered a dark-moment love scene) testify to that. Prairie Fire is a historical set in the 1830s version of the American West. While Prairie Fire is paranormal because it features time travel and elements of magic, it definitely has no vampires.
I need to get more query letters out.