As someone currently serving on a large-scope search committee, I really appreciate it when a candidate tells us why they are turning down our offer. Knowing why they took another job over ours or why, in some cases, they turned down our offers without having another job in hand can, at the least, help us know how to make better offers to the remaining candidates.
And yes, people are turning down jobs (at least, our jobs) in this economy / job market.
We seem to have received emails for all of the declined offers we have gotten this year. I'd keep it simple: "Dear Chair, Thank you for the great offer but after some deep thinking I have decided to pursue another opportunity. I really enjoyed meeting you and the others in your department. Best of luck with the rest of your search, You"
As I said above, though, I think specifics are handy. The chair or others in the dept might email you to find out why you're turning them down anyway, so you might as well say if you can share it.