However eager the British Government are to extradite him to the US, he hasn't committed any crime in the UK, and so can't be arrested for anything, let alone extradited. However, he's alleged to have committed (serious) crimes in Sweden. The Swedes have asked he be sent there for show-trial, and thus he's hidden in the embassy until it can be resolved. Even if he'd been picked up ready for sending to Sweden, the Brits would still have had no grounds to send him to the US without major international fallout (with the Swedes, especially).
IMHO, Assange is a bit of a twat. However, whatever's going on with him is far too fishy to be as clear cut as a lot of people seem to think. Additionally, wherever there's a fishy smell in the proceedings of the UK, the US is frequently involved somewhere in the background. We're something of a puppet, but for some reason we think the puppeteer is in Europe.