Prodi, who has strong commitments to NATO (i.e. The U.S, Britain, and pretty much all of the EU) to maintain Italian troops in the safest parts of Afghanistan, is facing a lot of heat at home over his support for troops in that country. Public opinion polls show the conflict is increasingly unpopular, and Prodi was forced to briefly step down only last month over opposition from the center-left against his policies in Afghanistan and support for expanding U.S. military bases in his country.
To make matters worse, he faces another vote in just a few weeks on whether to continue the Afghanistan deployment... a vote which may threaten once more to bring down his government.
Prodi has no good choices here, if he wants to remain in Afghanistan. Getting out is the easiest thing to do, and frankly, even if he tries to make a stand, he might find his hand is forced anyway. He can only hope that the hostage taking will backfire on the Taliban, and shift popularity in his direction... which doesn't seem very likely to me, as those most likely to move in his direction are those who are already supporting the old PM Berlusconi.
On a straight mathematical level, pulling out 1,900 people isn't all that bad, if it saves three lives. Of course, it would frustrate a whole lot of British, Canadians, Americans, etc. who will find themselves having to take up the slack.
So, what do you do if terrorists want you to do something that your own people would like you to do? Never buckle in to the demands of terrorists? Really?!