As the L.A. Times notes, "until now, the Obama administration had taken the view that it had a duty to defend all laws, including measures it considered discriminatory, so long as they could be justified as constitutional." And that's not something quirky about the Obama administration. The DOJ almost never abandons a federal law like this:
And let's be clear: it's not hard to defend DOMA. Obama's DOJ did it in 2009. The arguments that they can't think of, or which they now hold to be unpersuasive, are ones that they used -- and won with in court -- at the start of the president's term.
So while Justice Departments under both Republican and Democratic administrations have done (on rare occasion) what Holder, et al, are doing now. But politics aside, they shouldn't, unless there are genuinely no reasonable bases upon which to defend the statute. That sort of policy is a dangerous affront towards the checks-and-balances which make American democracy so stable.
The role of the Executive Branch (and in a particular way, the Justice Department) is to execute the laws properly passed. Congress creates the laws, the sitting president has the chance to sign or veto the law, and if vetoed, the Senate can override that veto. Once every stage has cleared, the president and executive branch aren't supposed to pick and choose which laws are and are not going to be enforced. That abrogates the power properly vested in Congress. There's an apocryphal quote that after John Jay ruled that deporting the Cherokee was unconstitutional, President Jackson replied, "John Jay has made his decision; now, let him enforce it." That mentality creates a real constitutional crisis if it happens often.
Prosecutorial discretion, as I understand it, is better confined to applying the law to the facts. Determining if so-and-so did or did not violate the law, and if there's a reasonable likelihood of getting a conviction, etc. So when the Obama Justice Department decided that they wouldn't apply civil rights legislation against the Black Panthers, and there were murmurs from within the Civil Rights Division that they wouldn't apply these laws against any minority defendant, it was a likely abuse of prosecutorial discretion, but still within their rights.
On the other hand, there's what we have here: deciding whether or not the law should exist. That would consolidate every power (the legislative power to determine which laws are to be enforced, the judicial power to determine the Constitutional validity of a duly-passed law, and the executive power to execute the duly-passed law) in the Attorney General, who never even faces a democratic vote (and in the cases of recess appointments, may face no vote whatsoever). I mean, is there any question that Americans wouldn't have voted for Deputy Attorney General James Cole (an Obama recess appointee who said "The acts of Sept. 11 were horrible, but so are these other things," and equated it with the drug trade, and who the Senate refused to confirm) to control the executive, legislative, and judicial branches?
All that said, it's morally better to announce that you won't defend the law at all (enabling an interpleader, like the House, to step in), than to pretend that you're defending it, while rejecting literally every one of the reasons which won at the Circuit Court level (which Holder announced was the alternative, basically). The latter, more devious, strategy has been one that the Obama Justice Department has employed on a number of other cases.
So whether you love or hate DOMA, the refusal of the Justice Department to execute and defend the law is a real shame, and bad precedent. (Also, is there any doubt at this point that Obama supports gay marriage? Is it even possible to think gay marriage should be illegal, while declaring unconstitutional that same position?)