Like the Beltway sniper (who killed "only" ten), Holmes is a poster boy for the death penalty. He'll put on an insanity defense, sure. Let him. He's going to wind up in secure custody for life one way or the other; it's not like the prosecution has to worry about his walking away if there isn't a conviction on a death penalty charge.  That's what makes this decision easy.  The government is not confronting the typical downside when considering a defendant's plea offer. Normally, the prosecutor must consider the possibility that there might be an outright acquittal and the defendant will walk.

Not here.  If there is an acquittal, it will only be by reason of insanity, so the only place Holmes will be walking is the most secure and least pleasant insane asylum you can imagine.