Michael, I hear what you're saying. And if the images were not nudes, I would agree 100%. You're absolutely right that, provided the images were covered by model release, there is no legal obligation whatsoever to return or destroy negs. There's not even a legal obligation to not use or display the images. Again, though -- it's the reputation that I want to protect, paticularly if my main work was nudes. You (the photog) can always say 'no.' Even if you have said 'yes' once or twice, you can always say 'no.' But if you use and / or retain very personal images against a model's will (even if she initially agreed to let you) it can be that much harder to get models / clients. Word travels.
Now, if these were regular not-so-personal portraits and they were covered by model release, I would handle it differently. I would not return the negs, and I would use the images anyway, unless there was a very compelling reason otherwise. (For example, if using them would somehow be dangerous to the model. I had a situation like that once.)
There are many different ways to handle the situation, though. Let each handle it in the way he/she feels is right.