It is interesting, to say the least, to see non-NASA people's opinions on this issue, and moreover, to see people's opinions who are technically minded but outside of NASA. As someone working on Constellation at NASA, I am living this issue every day, and have been living it for months now. There is lots of misinformation on this thread, and lots of opinions I disagree with. I won't take the time to really respond to any of them, but in the case of the former, it's entirely understandable considering the poor communication coming out of NASA (both in general and on this specific issue) as well as the poor quality of news reporting as it relates to spaceflight (and by extension, nearly everything technical in nature). In the case of the latter, everyone is entitled to their own opinion. Mine is that we need to get society off this rock as soon as possible and establish a permanent self-sustaining settlement on another one as a means of risk mitigation against the various calamities that could destroy human civilization. Second, I feel it should be us (the United States) because someone is going to do it - it will happen eventually. That point should not be up for debate. For us to sit around spending money on things like wars and bailouts instead of continuing the role as the leader in space is, in my humble opinion, short sighted. But I digress.
The one thing I will say is that Constellation is not dead - yet. It's had its head cut off by reassignment of the program manager. It's been dealt a tough blow most recently with HQ telling the prime contractors (Lockheed, ATK, Oceaneering) that they need to put money into reserve for contract termination liability - the costs associated with winding down a contract. Typically this contract clause is never enforced, and especially not at this time of the year. Our fiscal year ends on Sept 30. These contract termination liability costs now represent about 50% of the money left in the budget for this fiscal year, which essentially means that things need to be cut to the bone to get there. Many people feel that enforcing this clause is a pretty shady way of circumventing Congress and the law, because until Congress signs a new budget or specifically tells NASA to stop working on Constellation, NASA is legally obligated to continue working on it as the program of record. By enforcing this clause, it could be construed as circumventing this legal process. If a budget agreement is not found by the end of the fiscal year (and that is looking more and more likely), then NASA gets a continuing resolution - the same money allocated the same way for next year as it was this year. So hypothetically, NASA could pick back up with this "new money" and continue working on Constellation.
That being said, for months now, before this contract termination issue came up, most of the different Constellation projects (Orion, suit, etc) have been working to try to scale back design, remove Lunar content, accelerate the schedule, reduce scope, etc to try to "bridge the gap" between what Congress says they should be doing and what HQ and the executive branch says they should be doing.
Lastly, I think that most people at NASA don't necessarily have a problem with Obama's general plan for NASA - they have a problem with its lack of specificity, lack of a concrete goal, lack of a timeline. I get the feeling that if Obama came back and said he wants to cancel Constellation, come up with a new heavy lifter (both things he has said before) but also that the goal is to establish a human presence on "X" surface "Y" years from now, more people might get on board.
