It's passenger's decision. The full legalese is here: http://eur-lex.europa.eu/LexUriServ/...01:0007:EN:PDF

And it says (emphasis mine):

Right to reimbursement or re-routing

1. Where reference is made to this Article, passengers shall
be offered the choice between:

(a) — reimbursement within seven days, by the means
provided for in Article 7(3), of the full cost of the ticket
at the price at which it was bought, for the part or
parts of the journey not made, and for the part or parts
already made if the flight is no longer serving any
purpose in relation to the passenger's original travel
plan, together with, when relevant,
— a return flight to the first point of departure, at the
earliest opportunity;

(b) re-routing, under comparable transport conditions, to their
final destination at the earliest opportunity; or

(c) re-routing, under comparable transport conditions, to their
final destination at a later date at the passenger's convenience,
subject to availability of seats.