Is there a way to recover the database file as it seems that I lost the key to it ?
No. You need to provide the key to access your data, otherwise KeePass would not be a secure store.
Were you using a keyfile, password or both?
would be nice if we can have Password Recovery Disk(USB,CD,...)
Similar to WinXP.
A password recovery disk would be a backup of the keyfile.
yes but lets say I don't want every time to use a keyfile to access the Keepass program.password is enough,but just in case if I loose it at least I can recover it with keyfile.Now if I choose keyfile option I have to remember both Password + keyfile.An option like this would be great. thanks.
KeePass has only 1 password so a backup disk is not really possible. You will just have to write your password down and store it somewhere safe.