Let me explain for those who seem to need it. There are several factors in play here.
First of all this is one more in a long string of Republican sex scandals going back to well before the last congressional election. Scandals in which Republicans have demonstrated a knee-jerk reaction of defending their colleages even in the face of damning evidence. This has established a mindset amoung voters of viewing Republicans as "ethicaly challenged." In order to avoid further loss of voter support, they can't afford to automaticaly jump to anyone's defense anymore.
Add to that the fact that Senator Craig has demonstrated a willingness to break with his party on issues that the administration viewed as key. Hence the 2005 blog I posted. Without an unblemished record of party loyalty, Craig puts himself at risk from his own party. Let's face it, for all their talk of "family values," the thing Republicans really value most is party loyalty. If they need to "throw a lamb to the wolves," it may as well be someone who has shown disloyalty in the past.
Then concider the Idaho Senate election next year. Craig would have been an automatic shoe-in with his constituants... until now. His opponent Larry LaRocco is going to hammer on the ethics question all through next year if Craig stays in office. If he resigns now, Governor Otter can appoint a new Republican senator who who will have a year to establish a favorable reputation with the voters. This would greatly improve Republican chances of retaining the Idaho seat in 2008.
All in all, Republicans can't afford to defend him, have little reason the support him, and would gain an advantage by getting rid of him. Therefore...