I think the LeBron factor will work the opposite way. It will motivate them. This is a team full of guys with a lot to prove. I know Byron Scott has gotten ripped by plenty of fans (and Kidd) but I think he's a decent coach and will know how to keep them focused and using that us-against-them mentality to make the team stronger.
Motivation only goes so far though, you need talent to win games. Fortunately for Cleveland, they do have talent -- the supporting cast was way underrated. Varejao, Moon, Jamison were all very good players last year and Parker, Hickson, and Mo were pretty good themselves. Losing LeBron hurts big time, of course... he's probably a loss of 25 wins all by himself. But they also ditched their worst performer in Z so that helps a bit in mitigating the loss of Shaq and West who both were helpful.