The penny costs more than it is worth to mint. Pennies can basically only be gotten rid of by using exact change, which wastes people's time! Often, when pennies are dropped on the ground, they are not even picked up due to the general population knowing they are basically worthless. They have no buying power on their own, so just eliminate the strain from the system and round costs to the nearest 5 cents.
(For the Lincoln lovers, there is still the $5 and that won't be going anywhere)
See this video for more information: http://www.youtube.com/watch?v=y5UT04p5f7U