If North Korea goes to war, they will be destroyed. However, they have so many weapons trained on the Capital of South Korea that Seoul would no longer be a standing city. Both sides would pay a huge price if war occurs.
To use the phrase, If I was a betting man, I'd say that the situation escalates close to the brink of war and then the two Korea's withdraw to the uneasy situation they were in before the South Korean ship was sunk. This is a pattern with the two countries.
However, the leader of North Korea is ill, crazy and an egomaniac. He is a wildcard and cannot be relied upon to act in his and his country's own self interest.