I would argue that the Filibuster actually doesn't keep policy moderate in terms of the overall political spectrum, just that it keeps policy somewhere between the two parties. In other words, if you have a far right party and a moderate left party, the midpoint between the two is not the actual center, but center-right.
Bipartisanship in general is very flawed in Washington, because even if you're aiming to make center-right policy, there's still a reward for being as extreme as possible in your initial offerings in order to give yourself more bargaining room to "give up" during the negotiations process and ultimately come up with center-right policy. For example, the Democrats have been criticized for starting from the Public Option instead of starting from Single Payer, because they had less to give up along the way while negotiating.
The political lessons I've personally taken from 2006-2010 are disheartening. Even though Republicans lost the 2006 and 2008 elections, Democrats really haven't managed to get a whole lot of their agenda through, and I fault procedure for a lot of the failings. A couple of things I noticed...
1) The way Senators are elected is extremely counterproductive.
You can't have a complete changing of the guard that reflects the mood of the populace because you're only cycling out a third of the U.S. Senate every 2 years. As elections are becoming increasingly contentious (such in the case of Franken v Coleman), some seats remain in limbo for long periods of time. That means each incarnation of the Senate only has two years to pass legislation, hold hearings, debates, et cetera. Add in Holidays, Filibusters, deaths, unexpected vacancies, Amendments offered by the minority party simply for the sake of stalling, and you get a Senate that is a very inefficient body. Not to mention it costs the taxpayers money to have 3 elections during the course of every Senator's term. The consequences this has on presidential politics, the quality of legislation, etc. is very dire.
2) Senators are way too powerful.
Joe Lieberman is a perfect example of this: one man can hold the Legislative Agenda of both the Senate and the House of Representatives hostage, if he so chooses. He wasn't even reflecting the will of his constituents. And all of that power concentrated in one individual makes them way too easy to bribe or otherwise influence. News stories about C-Street, political corruption, and stealth senatorial proceedings leave me feeling pretty cynical about our government's structure.
3) The American People have ADD.
The populace expects far too much of the current political system. Barack Obama has essentially set about doing what he said he would while campaigning, and yet his approval ratings have plummeted below the percentage of people who voted him into power. He received the majority of the popular vote, but in a recent poll only 39% of people say they would re-elect him if a vote was held tomorrow.
In a lot of ways we, as a people, glorify political candidates during the campaign season and then find ourselves disappointed when our elected officials don't walk on water to save a kitten from terrorists while reducing unemployment, serving as the head of their political party so their power base isn't undermined in the Senate, and dealing with the day to day duties of the President. We expect far too much far too quickly, then change course when we don't get it. This results in a rubber-banding effect, that creates a political climate in which government fails to do anything substantial.
Solution? Don't get rid of the filibuster, get rid of the Senate. It's a poor analogy, but the bicameral nature of Congress is comparable to using two condoms while having a one night stand. At the time of the Constitution, it was a brilliant compromise which helped establish our nation and made complete sense. Today, things have changed. Technology enables us to deal with a larger governing body, the disparity in population between smaller states and larger states has grown, and the trouble with having a 100 person 'legislative checkpoint' at the helm of the country is becoming very apparent as political corruption becomes so prevalent.
Practically speaking, it's probably nearly impossible to accomplish such a change. It would require a groundswell of popular support. The Senators obviously won't want their positions nixed, the media thrives on having Senators serving as Political Celebrities to report on, special interests like having a couple of people to lobby to instead of needing to deal with the vast house of representatives, and this would require a constitutional amendment. Still, I wonder why people who speak of small government never discuss this.