Exactly, Iraq was much more stable under Saddam. The political and religious freedoms weren't nearly as high (although he did start to try to use religion a little bit to get support for the first Gulf War), religion certainly wasn't the rule of the land (nor was it persecuted as far as I know). Much of his attacking of groups was along political lines (e.g. Kurds so they wouldn't separate/Southern Shiites so they wouldn't overthrow him, etc.).
This doesn't mean Saddam was a good ruler, just that the US has done a terrible job at replacing his government with one that serves the people of Iraq. (And of course the jury is still out on Iraq's future, no matter what McCain says).
How was it liberal? I believe it was actually a planned economy where most industry was nationalized. Kind of the opposite of liberalism if you ask me. (Doesn't mean it was socialist though of course).