Sandy is very large and slow moving. Any hurricane/tropical storm can hit you with a variety of dangerous weather. With this storm it looks like heavy rain will be one of the big dangers. Flash flooding will be possible over the next 24 hours with river swells continuing inland for days.
Rain caused floods will be a separate issue from the storm surge. Storm surge is statistically the most dangerous part of a hurricane. Urban areas could see a surge of 6 - 10 feet from Sandy. Under ground infrastructure like subways and buried power lines could be submerged.