Dont break up by txt, email or msn, its just insulting.
Also dont use any stupid excuses (my mom dosent want us going out, i dont want a boyfriend right now, im turning gay, and yes iv had them all used on me ='/) since it will REALLY screw up the guy.
your best way is in person or in a letter, not sure about the phone and just tell him that you dont think it will work. Oh and never say you still love him, he will just see it as a way back to you.
Also i dont think its a good idea to stay friends since he will probably try to get back with you if you do, but other people keep there exs as good friends.