Contesting TP is not such a bad move for the SDP. They know their demographic well - TP is made of a lot of district 10 types who are the most likely to vote for the SDP. In fact, the two constituencies which are the friendliest to the SDP are Mountbatten and Joo Chiat - SMCs with lots of landed property people. But they will be contested by NSP and WP, and they could well be opposition party territory in 2016. The SDP will not be in a hurry to take over that after the debacle of PEBE. Even if the SDP doesn't win TP, a strong showing could gain them a foothold there, and LKY is not going to live forever, is he? We don't even know if he's going to contest TP in 2016. Singaporeans are not going to vote for a sick man, as Chiam See Tong found out in 2011.
Also don't forget - a lot of FT live in TP. It's not as friendly to the PAP as you might expect. Look at what happened to Joo Chiat aka little Vietnam.
The SDP were done in in HBT during the last elections - they did well in Bukit Timah but not in Holland because the Queenstown people didn't buy into the SDP thing. If they gave HBT to the Worker's Party, it could be a good place for the WP to puncture a hole in the west. The PEBE was a big big shock with big big ramifications - it's a new housing estate with young voters, unlike the middle aged places that you would associate with WP - the eastern / built in the 80s / high number of Malays or Teochews. It's a place similar to Jurong, or Chua Chu Kang. The fall of PE should make the PAP extremely worried about what happens if Pasir Ris Punggol had a strong opposition. Bye bye Teo Chee Hean.
Contesting West Coast is also a viable exercise for them. West Coast was contested by Reform Party, which thanks to the PEBE can be considered a spent force. Contesting AMK, the other Reform Party contested area, would be difficult. Pinky is not that unpopular. And thanks to a well-timed toilet break during the white paper voting, neither is Inderjit Singh.
Put it this way. WP is probably maxed out at the moment, because they have to fight AIM-gate. (Unfortunate but necessary). NSP were already maxxed out. SDP and DPP are the ones who have to enter the fray and grab whatever territory is left from SDA and RP, thanks to their respective suicides in PEBE. That means that Ang Mo Kio, Pasir Ris and West Coast are up for grabs. This is why, barring any sudden rise of new political forces in between now and 2016, I don't see any serious squabbling for seats in the next GE. I think there's just enough land to go around.