The National Review suggests that the president's claim of executive privilege in regards to the firing of the federal prosecutors may be strong : "The oversight power of Congress tends to follow its legislative power. In those areas where it has a direct hand, it has a strong claim to exercise oversight over the executive branch, but not where it doesn’t." Meaning that if the Congress has no role in the act it is investigating, it has no right to mandate that documents be produced.
They suggest that if the subject concerned the implementation of an act Congress passed, then they would have the right to investigate and--perhaps--override claims of executive privilege. They continue to point out that the purpose behind executive privilege is to allow the president to get unfiltered advice and denying him executive privilege here could undermine the ability of future presidents to get broad ranging advice.
It may well be that this is at root a political dispute and will require a political solution. If a Democrat wins the White House in 2008, then the issue of a Republican leaning Justice Department becomes moot, and if Democrats hold on to Congress, then there will no oversight of their attempts to either right any wrong they perceive to have been committed by Bush or tilt the Justice Department in their direction. Of course if Republicans were to take over Congress while a Democrat is in the White House, any precedent regarding investigations established now could come back to haunt them.
Maybe their best move might be to raise a stink, but ultimately let the issue die down before it goes to the courts.