The Omaha World-Herald is reporting that
"he will not run for re-election and that he does not intend to be a candidate for any office in 2008".
The linked article also speculates who will potentially run to replace him. On the Democratic side, apart from Bob Kerrey, are Scott Kleeb (who lost the bid in 2006 for the 3rd congressional seat), and Omaha Mayor Mike Fahey.
On the Republican side, the two announced candidates so far are Attorney General Jon Bruning and financial adviser Pat Flynn. Other possible candidates are former Governor (and current US Agriculture Secretary) Mike Johanns, former Omaha Mayor Hal Daub, and businessman Tony Raimondo.