That's the next question to be answered.
According to ESPN's Chris Mortenson, QB Brett Favre has written a letter asking for his unconditional release. Whether it would be better to bring him back as the starting QB next season is irrelevant because it seems clear that GM Ted Thompson has no intention of letting him come back.
The Packers issued an odd statement on their website that he'll be brought back on the active roster, but they are going to do what's best for the team. As Chris Jenkins says, it's not clear what the Packers will do once he's brought back on the active roster.
Now it's a matter of who will trade for him. I'm sure they'll bring him back on the active roster and trade him instead of an unconditional release because they can control where he goes, and avoid a nightmare scenario such as him signing with Minnesota. Favre's 2008 contract is around $12 million so he'll have to renegotiate that to fit under another team's salary cap. I would guess they could fetch a 4th round pick in return, which is what was given for CB Adam Jones and WR Randy Moss over the past couple of years when their former teams had to trade them.
Unfortunately this is not a happy day. Favre could have avoided this situation if had changed his mind back in April when he originally considered it. This puts undue pressure on everyone involved, and if doesn't work out (the Packers win next season without him, and he succeeds where ever he plays next season) it will be a black eye on Favre, Thompson, McCarthy, and Rodgers.