For whatever set of reasons, going to summit would have made Obama and the administration look weak at home.
That is the reasoning precisely. Some of the news stories noting the cancellation are merciless in their insults to Obama: e.g. "Finally, a red line that is actually red".
Obama said that he was, “not going to be scrambling jets to get a 29-year-old hacker” during a press conference in Senegal. That was a pretty straight-forward signal that he was not going to make a big deal about Snowden. Other people in the USG have been losing their proverbial shit over the situation, but Obama himself deliberately downplayed it.
Actions speak louder than words. This is obviously a much bigger issue to the Obama administration than they are saying.
http://latino.foxnews.com/latino/politics/2013/07/10/bolivia...
Russia’s disappointing decision to grant Edward Snowden temporary asylum was also a factor that we considered in assessing the current state of our bilateral relationship.
The optics internationally are very different; influence depends on military and economic levers. Summits exist to show those levers getting pulled; if neither side is willing pull anything, there's no point in having a summit.
I dunno. Cancelling a meeting doesn't exactly look strong either.