Saying the pledge has not be required for a long time. In 1943 it was established that schools could not require that students say the pledge. This suit was brought a Jehovah's Witness group, on the ground that their religion prohibited them from pledging to a flag. This suit actually occured before the phrase 'under God' was added.
The new suit is basicly arguing that just letting students not say the pledge isn't enough. If the teacher is at the front of the class leading the students then there is a coercive element that makes it an unconstitutional establishment of religion.
Personally, I've got mixed feeling on this. On the one hand, the idea that the phrase 'under God' isn't a reference to a particular belief system is absurd. Just imagine the complaints that would be spit out of the phrase was changed to 'under gods'. If it was truely neutral then it should be acceptable either way. And I do object to having religion forced down upon people that way.
But on the other hand, its really a minor issue. As long as the rule that students are allowed to sit out the pledge is enforced*, the argument about that phrase is trivial. There are a lot more important issues that need to be addressed.
Jay
* And there are places in the US where that needs some help.