I think if you look at qualifying performance and squad strength, you have to give England a reasonable chance. They are still a slightly false price at 8.6 on betfair, but that is nowhere near as overbet as they usually are for international tournaments
I wouldn't be surprised if they made it to the semis, at which point they would probably have to win two matches as slight underdogs (depending on the opposition) - not an overwhelming possibility, granted, but nowhere near hilarious; you'd have to tip someone like Switzerland or USA for that.
Speaking as a Welshman, I'd love England to get to the final - then get beaten by Argentina (with an Aguerro goal that had more than a hint of hand-ball :-))