I can see that being a double edged sword for him. On one hand, he will avoid the inevitable taking of the piss that happens with all Presidents attending. That would be good for his own ego since he can't stand any kind of comment or joke about him. I would wager that is the main reason.
On the other hand he'll alienate the press corps even more- and that's not in his best interest at all.
I'm not sure it's possible for him to alienate the press any more than he already has. This dinner would have been different than any WHC Dinner I have ever seen. The press fawned over Obama, and while many of them took issue with George Bush, the remarks/satire/jokes/ have always been in relatively good fun. This would have been awkward, tense, and full of animosity from both sides.
The press has long been in need of reigning in, and while I do not necessarily agree with how POTUS is going about it, at least someone who matters is calling BS.