That leaves IA-04 Rep. Steve King a pretty clear path to the GOP Senate nomination if he still wants it, and given King's hard-right, foot-in-mouth ways, also gives IA-01 Democratic Rep. Bruce Braley (already in the race, and expected to clear the Dem field) a similarly clear path to the Senate. Consider PPP's most recent poll of Iowa, taken in early February shortly after Harkin's retirement announcement and before Braley had gotten in. They found a race between Latham and Braley a tossup, with Braley leading only 44-41. By contrast, Braley led King by 11, 49-38. That same poll showed King romping in the hypothetical GOP primary, though, leading Latham 50-27 in a two-man race. Those odds, more so than his duties to IA-03 constituents, are probably what weighed on Latham's mind as he made his decision.
Also, Latham may have been feeling burned by Karl Rove's decision to declare war on Steve King and, more generally, on off-message, anti-establishment GOP primary contenders. That only seemed to have the effect of riling up King, and his small-donor backers, even more. There's still, of course, the possibility that one of Iowa's other establishment GOPers, most likely Lt. Gov. Kim Reynolds, could try to fend off King in a primary. But PPP found her standing even less of a chance than Latham.
The one downside here is that Latham's slightly Dem-leaning IA-03 would have been a strong pickup opportunity for the Dems if it were open, but given his durability (he defeated Dem Rep. Leonard Boswell in a redistricting-forced mashup by around 8 points), it's a lot less of a tempting target with Latham sticking around. The 3rd went for Obama 51-47 in 2012, making Latham one of fewer than 20 House Republicans in districts won by Obama, and any road back to the House majority has to go through seats like Latham's. (Businessman Mike Sherzan is the only announced Democrat in IA-03 so far.)