I think it's apparent that this was not Caroline's decision, but the governor's. She was allowed to withdraw with the standard pretext -- to spend more time with her family. Only, in her case, it was probably what she really wanted all along.
This show of decorous strength and independence helps Paterson's electoral chances in 2010, not weakens them, imo.
Update: Uh... okay. Thing is, one way or the other, it seems her "candidacy" is toast. If the report of her withdrawal came from Paterson, then she (or somebody near her) is playing a game of chicken with him -- not smart. And if the withdrawal report did come from her, and she's now changed her mind, she's just added an exclamation point to a "campaign" of remarkable ineptness. I mean, uh, you can't, you know, do this kind of thing in, like, public.
Update 2: “The fiasco of the last 24 hours reinforced why the governor never intended to choose her." We dodged a bullet here. Talk about unreadiness for primetime.
Update 3: A good outcome to this Rashomon tale.