BAD move. If I were Bush, I'd say, "Appoint him, or no UN ambassador."
Do you really think that Dems in Congress need an active UN ambassador more than Bush? Wow!
A vacancy at a crucial diplomatic post doesn't really hurt the legislative branch directly, but makes life very difficult for the administration. Leaving the UN post vacant indefinitely would, primarily, hurt the State Department, making its work that much harder and pretty much guaranteeing diplompatic failures to come. On the other hand, since the Congress has no responsibility for the day-to-day conduct of foreign policy, such a vacancy creates little inconvenience for the legislators. As far as they are concerned, if the president wants to conduct his foreign policy without a UN ambassador - good for him. If he (almost inevitably) manages to screw up as a result - even better for the congressional opposition: they will be sure to conduct hearings to try to figure out the causes of the administration's incompetence.
To sum up, the threat of keeping the UN position vacant could be effective in the hands of the Congress, but would be entirely ineffective when wielded by the executive: it's not really a threat at all.