From the WSJ’s "Prospects Fade for Quick Ouster of Blagojevich", here’s the money quote:

Unless Mr. Blagojevich resigns or is impeached, he retains the power to appoint the next person to the vacated U.S. Senate seat. Asked at a press conference after the hearing on Wednesday if Mr. Blagojevich intended to make the appointment, Mr. Genson said no.

"[U.S. Senate Majority Leader] Harry Reid said that they’re not going to accept anybody he picks," Mr. Genson said. "Why would he do that?"