First, of course, are all the usual arguments against it, e.g., her Iraq war vote; her assassination comment; her old-style politics in a year when the presidential nominee will be running as the candidate of change; her divisive, politics-of-destruction campaign strategy in the primary; her "most hated politician" ranking in the polls; the past Clinton scandals waiting to be dragged out of the closet, her husband's loose cannon-unpredictability, etc. Despite the advantages touted by Clinton supporters (If you don't pick her, we're going to make you lose the November election!), Hillary's baggage would end up being a distraction to the Obama campaign. In the end, Hillary in the VP slot on the ticket would do Obama and the Democratic Party more harm than good.
But all that aside, the real reason not to put Hillary in the VP position is because Obama has steadily and repeatedly shown that he is a dignitarian—defined as someone who values and chooses to live by principles of dignity for all—and he aims to run his campaign and his administration on such principles. Clinton, in contrast, has shown the opposite; what, in the parlance of dignity, would be termed rankist. Rankism is abuse of the power that comes with rank. It includes a wide range of behavior, such as: common snobbery, bullying, sexual harassment, verbal abuse, using political status for personal gain, segregation, torture, or pressuring smaller nations to serve the best interests of a larger nation. It is also the "ism" that encompasses all other "isms"—including racism, sexism, classism, and ageism, all of which have been present in this year's primary campaigns. Rankism is currently so pervasive in our culture—and so unrecognized as a concept—that it goes largely unnoticed. The way to unify the party and the country is to target rankism, thereby simultaneously addressing the other "isms" currently at play on the political scene.
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Also, there is a reason for term limits. The Clintons earned $115 million since leaving office. The Presidency has vast powers, and power corrupts people of both parties. I think Hillary's tenacity was in part a real desire to get that power back, power can be addictive:
http://scotterb.wordpress.com/2008/05/29/the-awkward-exits-of-bush-and-clinton/
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