Four words - Delivery time and money.
Airbus was able to deliver the narrow bodies up to 18 months faster and Airbus gave away the farm (financially) on the deal. This has the potential (if US Airways exercises all options) to be the biggest deal Airbus has made by quite a margin and Airbus was hungry to break-out of seeing Boeing get all the big orders. Boeing had just inked the deals with American, Continental and Delta and had purchased MD, so Airbus was prime to make a big deal to avoid getting shut-out of the American market. Wolfe at US Airways took advantage of the timing to make a deal.
As to the "bad blood" between US Airways and Boeing, the order cancelled originally was for deliveries in the early nineties when then USAir was almost ready to fold from overexpansion and lack of cost control. [It was a pretty sick carrier at that time in terms of finances.] Boeing was using the lawsuit to try to force US Airways to buy old technology 737s (not 737NGs) and 757s. In the late nineties when US Airways was healthy again, Boeing refused to back down from its lawsuit. If Boeing had been able to offer faster delivery times (too big a backlog) and better economic incentives (Boeing made the decision not to "buy" business) then they would have gotten the initial narrow-body order.
Boeing and US Airways reached agreement to settle the suit prior to the wide-body order, but Airbus already had their foot in the door and got the wide-body order anyway.