Everyone's forgetting his successful peaceful mediation of the Henry Louis Gates conflict.
Seriously though. Purely a populist move. The Scandinavians really love Obama. The Nobel Peace Prize Committee believes that Obama's election and initial diplomatic gestures and efforts represent the greatest hope for world peace over the past decade. His failure to change any of the policies of Bush seems to have been ignored. This says to the world that Bush was so universally despised that the mere act of replacing him is worthy of the Peace Prize. That, and keeping Sara Palin from being one aged, cancer-riddled heartbeat away from being commander in chief.
Obama has great potential for doing things worthy of the prize. He should accept the prize as graciously as possible, make a speach about continuing his efforts. And donate the money to charity. Come up with a well-written speech in which he describes how humbled he is by the honor, blah, blah, blah, and while he doesn't feel that he has lived up to it yet, he is proud to accept the award on behalf of the people of the United States in recognition of our collective commitment to pursuing peace. But to decline the award would be perceived as ungracious. It would give the wingnuts trapped in their own partisan, media-blitz echo chamber, and who attack Obama for everything he says and does ammunition. LOOK! ObamaMessiah!!, How arrogent, he declined the Nobel Peace Prize!!. It's a no win situation for him, so him saying he doesn't feel he deserves it, but will "accept it as a call to action" is about the best way he can play it.