I was in exactly this position 24 hours ago. How the heck to say "no" to Berkeley?! Particularly: How to say 'no' to my prospective advisor there, who is amazing? I felt (and feel) certain of my choice, but that was after being dispassionate and rational and doing pro/con lists and soliciting advice from practically everyone I knew... and then having it all shake out into a stalemate. Then I just put it aside, decided not to think about it until, say, April. And within a week I was talking to other (re: non-grad student) friends as though the decision was made. When one of them called me out on it, I was like, "Oh. I guess I do know what I want. Actually, I'm dead certain I know what I want. But I can't rationalize it! I don't know how I got here! I just know where I want to go!"
But, okay, you have a problem: How to say "no"? I asked my undergrad advisor (and also, now, my PhD advisor, since he got the "yes"!) about how to handle this. He said e-mail would be fine, and that "a nice note to [prospective advisor] and the grad advisor would be a good courtesy, and of course filling out the online decline. The best approach is to be simple, honest and respectful -- and brief."
So that's what I did. Grad advisor wrote back a nice note today... haven't heard from PA. I had a really hard time pressing "send," but I feel totally fine about it now. Actually, really happy!
I hope it turns out this way for you. If it helps, remind yourself that what "feels" right does count. As much as this is