If you did not sign a contract for your new job, and since you haven't wasted any of their money by going to orientations or whatever, then there are no legal ramifications if you withdraw your acceptance. It will piss them off, but it's their loss if they're being as unreasonable as you say. Your letter should be simple and direct, on your letterhead (if you don't have letterhead, you can easily create it in any word processing program like Word) and it should be sent ASAP so as to not cause them further aggravations or more headaches for yourself. I would simply write something like:
I regret to inform you that I am withdrawing my acceptance of the job offer you gave me on (DATE) for the position of (POSITION YOU WERE HIRED FOR). I am sorry if this decision causes you any problems or inconvenience.
My reasons for withdrawing my acceptance are not at issue. However, you should know that one factor in my decision is that I have decided to stay with my current employer.
I certainly appreciate, and am flattered by, the fact that you chose me for the job. Unfortunately, the timing is just not right, and to accept the job now would be doing both of us a great disservice.
Best of luck in finding another candidate. Again, I am flattered that you offered me the opportunity to work for you and (COMPANY NAME), but I am also sorry that this situation did not work out as we had both anticipated.
Please feel free to call me should you wish to discuss this matter further.
If you're not comfortable using the word "job" and think "position" would be more professional, then change it. Otherwise, you don't have to give them any details other than this. The key thing is to express your regret, but also thank them for having the confidence in you by offering the job to you.
The last line is optional, but I would leave it in. It shows that you're willing to talk further about your withdrawing the acceptance. But, if they do call and it's an unpleasant call, tell whoever calls exactly that, wish them a good day and hang up. Only talk with them if they call and are cordial or respectful. And if you do have a conversation with them, don't open up and give them tons of details. Just stick to "now is not the right time" and you "don't feel that accepting the job would be in the best interests of both of you." If they badger you for a deeper explanation, again, tell them they are being unpleasant and ring off the line.
BTW, I had to do exactly this a number of years ago. I didn't handle it at all professionally and all kinds of trouble ensued. I waited until the Friday before the job started and had a messenger deliver my letter saying that I wouldn't be there on Monday (my employer practically doubled my salary to keep me where I was). It was a nightmare. You are going about this way better than I went about my own situation.