During my job search I got several offers and chose the most appropriate one for me. I really had no idea how I was going to say NO to others because I said how interested I was during the interview. I started racking my brains trying to find the most polite but persuasive way of refuse. Here's what I figured out.
As soon as I made up my mind to work in the company, I let others know about my decision. It's better not to waste their time on waiting and pointless negotiations. Also it's better to address to the interviewer personally and let him know about the decision on the phone.
After that I thanked my interviewer in written form saying that appreciated their time and interest in me. And we both were pleased with our negotiations, so that next time I can always call and apply for the job.

I hope my own experience will be a good tip for you in a situation like this.