Wow, a whole lot of wrong in this thread... let me right some of that.
Leno promised the Tonight show to Conan for YEARS. Leno was close to retiring, but NBC still wanted to milk that money, so they worked out a deal where he would start his own show "The Jay Leno Show" and move it to the 10PM Time Slot. Conan would get Tonight Show, and Fallon the Late show.
The problem? Leno's show sucked at the 10PM time slot. They moved his best skits (Headlines, Stuff we found on Ebay, Jaywalking, etc.) to the half-hour instead of the beginning of the show, causing a massive loss in viewers.
So NBC made a desperate move to save the show and decided to move The Jay Leno Show to 11:30, the Tonight Show to 12:30, and the Late Show to 1:30. This bothered Conan because he felt the integrity of the Tonight Show was being compromised, so he wrote a letter to NBC and said he would not be a part of this transition, because moving The Tonight Show to 12:30 would kill it. So, Leno effectively said "Move the show, or I'm taking it back." and we all know what happened there.
Oh, and the Millions Conan got from NBC for leaving the show? He used a large portion of it to pay his staff for nearly a year+ after they all lost their jobs.