I think that was a good response. By requesting the release of the hostages as part of the deal, that would give Iran a HUGE leveraging tool. By leaving them out entirely, it removes both sides ability to leverage the situation to their advantage. Imagine what Iran could of asked for in exchange, and watch the Media pounce on it as a capitulation if they gave in.
Oddly enough, however, Iran got and demanded relaxation of the prohibitions on purchase of conventional weapons and ballistic missiles. Ballistic Missiles!!!!!! Neither of those were topics of the nuclear issues either, yet Obama caved completely.