You can find his video announcement here. The news is currently the lead story on the NYT website.
I find Senator Obama's decision completely defensible and unsurprising. The system is broken. We cannot expect opt ins by successful candidates, especially in the internet age which has greatly decreased the cost of fundraising from micro-donors.
UPDATE: My friends Trevor Potter and Bob Bauer disagree about whether there were negotiations between the McCain and Obama campaigns over public financing.
See also Bob Bauer's comments to the Politico about Sen. McCain's 527 comments, which I anticipated here.
UPDATE II: Marc Ambinder asks how "reform" groups will react to the Obama announcement. This is an interesting question, given earlier controversy. So far, the reaction has been muted.
Common Cause says it won't criticize Sen. Obama but nonetheless gives him a "demerit." (What, is he back in second grade?)
The Public Campaign Action Fund is supportive of the decision.
The Brennan Center (in an emailed statement not yet online) is noncommittal.
And the Campaign Legal Center, in the past closely allied with Sen. McCain and headed by Sen. McCain's counsel, Trevor Potter, is silent.
UPDATE: I've been updating this post, along with an offer to moderate a discussion between Trevor and Bob, here at Rick Hasen's Election Law Blog.