It appears that an increasing number of Republicans are encouraging him to run, but he's said that he will wait a few months and see how his GOP counterparts are faring in the runup to the campaign. Opinion polls currently put him third, behind Guliani and McCain; I think it would be a good idea for him to come forward now and announce his candidacy if he intends to run, instead of waiting around.
He announced a couple of days ago that he has cancer (non-Hodgkins lymphoma). But he said that he isn't showing symptoms and it isn't expected to reduce his life expectancy. So who knows whether that will impact his decision any.
Personally, I would want to hear him state his case for the way forward for our nation, but I believe he is a person I can vote for. He seems to be a true conservative, and one whom supports the principles that I value most (guns, social issues, etc.).
Check this link for his background in the Senate on key issues:
http://www.ontheissues.org/Fred_Thompson.htm