I work on L&D at our hospital and we see this from time to time. Inductions sometimes fail. Your doctor may try again in a few days.
On another note, please don't be afraid of c-sections. Others post here that they weren't able to hold their babies right away- this may not be true! I've had 2 c-sections (the first when my TEN POUND son didn't come after 26 or so hours- I only dilated to 6cm, direct OP position.... the second was an elective repeat c-section with my daughter) I held and breastfed both of them very soon following their deliveries. I feel I bonded wonderfully with both children.
Remember, the miracle of childbirth is ALWAYS a miracle, regardless of the method in which the child enters this world- vaginally or via a "vaginal bypass surgery"! :)
Congratulations on your upcoming birth, and good luck!!!