Party Identification

In talking to people from various backgrounds and political beliefs (or professed political beliefs), I have noticed that people do not typically identify with their party to the degree that they assume to be the case. For example, it seems to be a fairly popular choice to declare oneself a liberal while in college, but most of these self-professed liberals are not as overly fond of the big government interventionism that typifies Washington liberals, and this is not merely a backlash against the Republican-controlled government. This disenchantment with regard to the federal government's ability to solve all of the woes of society appears to run much deeper than the support or lack thereof of the current people in charge. Conversely, many self-professed Conservatives, while believing in fiscal responsibility, also favor a strict separation of church and state and the expansion of civil rights and liberties that have become taboo subjects for the actual Republican party as of late.
Do these transformations indicate the next great shift in political parties or is the two-party system simply no longer sufficient to adequately represent the will of an immensely diverse populace? My hunch is that the real reason lies somewhere in the middle.