Buyers or sellers?
The Padres are in the cellar of the NL West, 24 games behind the first place Dodgers. At 37-58, they are obviously sellers. The problem for the Padres is that some of their most tradeable players are hurt, making them difficult if not impossible to deal. But the Padres are trying to add prospects in the hopes that they can build a contender some time in the next few years.
Hmm, where to start... The Padres have needs all over the diamond. With the trade of Scott Hairston and collapse of Brian Giles, Adrian Gonzalez is the only player who needs to stay on the field. Tony Gwynn Jr. has done a fine job too but whether he can keep that up remains to be seen. The same goes for the pitching staff, where only Jake Peavy and Heath Bell are good contributers. Peavy has about a 50-50 chance of not pitching again this year so he won't be included in any trades. Chris Young hasn't been able to stay healthy either of the last two years, and wasn't any good this year even when he was. Basically, the Padres just need more good players anywhere they can get them.
For the long term the Padres are in nearly the same position as they are in the short term. They've got a young bat in Kyle Blanks testing the water in the big leagues, but they still need better players at nearly every position other than first base. The Padres have quite a few young outfielders and they should eventually be able to piece together a decent outfield. But the infield leaves something to be desired and the Padres still don't have any pitching depth at all. When Kevin Correia is your third best starter you know you're in trouble. Adding more upside arms should eventually help the Padres pitching-wise and the offense will eventually get better provided some of the young players develop.
Big leaguers on the market?
Injuries to Peavy and Young should keep them in San Diego for at least the rest of the year. The team has already traded away Cla Meridith and Scott Hairston in seperate deals, so they don't have a lot of role players left ot trade. Moving Hairston at least got the Padres some nice young players from the A's. There have been rumors about an Adrian Gonzalez trade, but don't expect that to happen unless the Padres are absolutely blown away by an offer. Gonzalez is under contract through 2011 for very cheap and is the face of the franchise so the Padres have little reason to trade him. The only other player who would bring back a hefty return is Heath Bell, but the Padres have sounded reluctant to trade him as well.
Minor league strength
The minor league system has been rather thin for years now, and that (coupled with the payroll) has really been the downfall of the organization. The outfielders has quite a few prospects (especially if Blanks has to move there); guys like Jaff Decker, Cedric Hunter, and Kellen Kulbacki could be starters there in a few years. Coupled with Tony Gwynn Jr. and Chase Headley, they have lots of depth there.
They also have some pitching depth in the minors, but the problem is that most of them aren't going to be impact arms. Guys like Will Inman and Wade Leblanc are supposed to fill out the back of a major league rotation, not be some of your best pitching prospects. One player who could make a difference is Mat Latos, who was dominating in the minor leagues this season, going 8-1 with a 1.37 ERA in 72.1 innings across two levels.
The good news for Padres fans is that the team has begun committing more to drafting and signing high-quality amateur players. They drafted Donovan Tate with their first pick in 2009, considered by many to be the best high-schooler in the country. They also showed that they have become more committed to spending money on more expensive talent in the last year. Previously they were very frugal in this department, so this new committment could be a ray of hope that the organization is finally focusing on developing it's own players. Given the team's payroll, there may not be any other way.
Take on short-term money to win?
The Padres have the second lowest payroll in the majors (ahead of only the Marlins), they laugh at the idea of taking on payroll. They will be looking to shed expensive contracts wherever possible.