Your answer largely depends on your motivations for selling and why you want to buy.
I don't know your specific geographic area, so I can't comment on what the prospects for your immediate neighborhood are. And I defer to those who do. However...
Although I agree that now is an acceptable time to sell and buy, the reason largely is because there are a lot of good deals out there. So, if you added to your question: "I have a growing family and I know we'll need more space" or "the commute to where I (or my spouse) work is very difficult and we'd love to move closer...then I'd say you definitely should consider selling in order to buy.
However, if your primary reason for selling is simply because of the economic uncertainty--you're not sure if home prices are going to go lower and you want to bail out of a possibly sinking ship--then I'd say to stay where you are.
The problem is that while market conditions do vary somewhat geographically and by price range of home, they don't vary radically. So, if you're worried about prices declining further in your immediate community for the type of house you own, then you should be equally concerned about prices declining further for a "move-up" house (maybe, in your case, a 4 bed/2 bath built in the 1970s) in a 5-10 mile radius of where you are. So, you might jump off of one falling elevator...onto another falling elevator.
There are different projections on what the next few years hold. I'm probably slightly on the pessimistic side. I (like you, I think) don't see an upturn anytime soon. Another year or two of declines, then a relatively flat market, then possibly an upturn. So it wouldn't be wise to base a buy/sell decision on only what you think may happen in the future. But what you should consider--as I suggested above--is that whatever trends affect your current home are likely to affect a slightly larger, slightly more expensive home in the same geographic area. So, to be blunt, you won't weather the storm any better in a newly-purchased home than you will in your current one.
If you have a steady source of income, if you're comfortably able to pay for your current home, and you have no compelling reason to move (job change, expanding family), I'd suggest you consider staying where you are. And if you don't have a steady source of income, if you're having trouble paying for your current home (doesn't sound as if that's a problem), then my advice would be absolutely not to consider buying a new one.
So, you have every reason to be concerned. But don't panic. Sounds like you're doing fine.
Hope that helps.