This is how I did:
Subject of email: Final Decision
I sincerely thank you for giving me the admission offer to MBA program starting Sept 2007 at one of the greatest business school, ABC Business School. This was a great opportunity to know more about ABC Business School through the application process. But sometimes you have to make very tough decisions that become tougher when every choice carries the potential to lead you to success. That is why I have accepted an offer from another business school that best fits my career ambitions and goals. So I have to sadly inform you that I will not be able to be a part of wonderful MBA class that is starting in Sept 2007. I fully appreciate the effort the ABC admission staff has put into reviewing multiple parts of my application and profile. Even after this decision, my respect for Mr INTERVIEWER (It was telephonic interview with Recruitment Director) and other professors at ABC is still unshaken.
I hope we will cross roads at some point in life. I wish all the best to this year's incoming class.
If you have any questions, please feel free to contact me any time.