Here's what happened, taking away people's motivations and leaving only the legal/software stuff.
There are 3 distinct projects:
1. The Minecraft server, in this case decompiled. It has a proprietary license, and Mojang have been tacitly allowing it to be distributed.
2. Bukkit, a GPL library that could theoretically handle plugins for many Minecraft like games, although it's really only useful for Minecraft.
3. Craftbukkit, which statically links both Bukkit and Minecraft.
Now, here's the relevant section of the GPL FAQ, where it states that you cannot distribute a GPL and a proprietary program statically linked together.
A contributer to Bukkit (not Craftbukkit) for certain reasons blew the GPL whistle, and had Craftbukkit taken down for GPL violations.