Ultimately, this conflict comes down to territorial integrity and whether a sovereign nation has the right to uphold it when separatists within the internationally recognized boundaries declare de-facto independence.
In Georgia's case, the country that we know of as Georgia is actually a commonwealth of a number of republics. Recently, because of the geopolitical games to control the region, Georgia has been fighting an internal conflict between ethno-linguistic groups that want to remain allied with Russia, and others that prefer to ally with NATO and the West. During this conflict, both the United States and Russia have sent special forces to control the region. Georgia is vital to both Russian and NATO (read US) interests. At the moment, Georgia is being used as a corridor to transport oil from the Caspian Sea port of Baku in Azerbaijan, to the Turkish Mediterranean port of Ceyhan for consumption in the West. Similarly, Georgia is vital to Russia's strategic interests with Iran. Armenia, sharing the southern border of Georgia is pro-Russian (although there's a heavy opposition that wishes to break those ties and move closer to NATO) and has a north-south fuel corridor with Iran. By gaining control over Georgia, Russia can link itself to Iran through rail, energy supply, and various other economic resources. Similarly, by limiting Russia's role, NATO and the West can maintain a strong East-West corridor, thereby checking Russia's regional influence. At its heart though, this region of the world has seen its fare share of conflict between superpowers. When the Roman and Persian empires fought to a stalemate, it was Armenia and Georgia that were frequently used as buffer states. When the Turks and Byzantine were at odds, it was again the same region that was critical for power and control.
The modern problem also stems from the borders of Georgia being drawn up by Stalinist policy. In essence, the Caucuses is a very culturally heterogenous region, with various ethno-linguistic groups vying for political independence. As many remember from the wars in Chechnya and to a lesser extent Daghestan in Russia, as well as these current conflicts with South Ossetia and Abkhazia in Georgia, the region is highly volatile and prone to constant dissatisfaction. As an Armenian, I can attest to similar problems when the Armenian province of Nagorno-Karabagh in Azerbaijan tried to break away and assert their political independence. Ultimately, it lead to a still-ongoing conflict and although the region is under Armenian control, the political situation is highly charged. Any regional conflict like this in Georgia can easily escalate into a larger conflict with these other republics.
One thing that must be understood is that the media is going to maintain bias towards NATO and the West. The actual spark of this conflict was Georgia's surprise attack on South Ossetia's capital, thinking the world would be distracted, and the expectation of Russia's excessive response. The thinking in Georgia was that with Russia's severe aggression against its vital interests, the West would come down hard and it would cause a major diplomatic rift. The player in all this that goes unmentioned are the Americans who've sent special forces in Georgia. It would be cynical to assume that Georgia was coerced into a response thinking that they would capture South Ossetia (although internationally recognized as Georgian territory, many of its citizens hold Russian passports and are therefore like their brothers in North Ossetia, Russian citizens), but with the vital importance of regional control, this is sadly the typical international chess game, with the expense being paid by innocent civilians. It's also obvious that the provisional passports that Russia has granted to the Ossets occurred knowing that this conflict was oncoming and Russia needed an excuse to claim they were just defending their citizens. It must further be understood that in no means is Russia innocent of exploiting the situation but it's to provide a better framework for explaining the conflict in the region. It can also be argued that the Soviet policies of Russification are a major factor for so many ethno-linguistic groups allying with Russia, but as can be seen from the conflict in Chechnya, it wasn't exactly beneficial to Russia or completely effective. What Abkhazia, Ajaria, and South Ossetia, have in common is that although they're provinces of Georgia, they see their future closely aligned with Russia instead of the West. Since they're semi-independent and have de-facto control over their regions, they feel that they shouldn't need to be subservient to Georgia's pro-Western president, Saakashvili, and the West. His Rose revolution, though quite important for regional control of the West, is actually looked upon as disastrous by the opposing provinces. When you have such a culturally heterogenous region that's also of great strategic importance, you're going to have all sides attempting to exploit the region for their economic benefit. It comes down to simple economics and geopolitical control.
Attempting to recreate the stage that this conflict is set is somewhat of a difficult task, but in doing so, the nature of the cycle of violence and geo-politics in this region becomes clear. From the map below, the semi-autonomous provinces of Georgia are indicated in red. Both Abkhazia and South Ossetia border Russia, and more importantly prove strategic in Russia's influence within Georgia. Currently, both the Baku-Ceyhan pipeline (operated by British Petroleum and highlighted in Blue) and the Baku-Supsa Pipeline travel across a narrow central corridor of Georgia, before diverging. The Baku-Ceyhan then proceeds through Turkey, to the Mediterranean port of Ceyhan, while the Baku-Supsa terminates near a town Sochi, in another semi-autonomous province of Georgia known as Ajaria. Sochi is an important Black Sea port for the Caucases region, allowing the fuel to be transported on barges that are sent across the world. This is known as the East-West corridor and is already a well established fuel-transit system. Yet, there's also a natural gas pipeline just recently built that connects Iran to Armenia. As can also be seen, there's an additional natural gas pipeline that emanates from Russia, connecting to Georgia. If the two natural gas pipelines can be linked (the hard to see broken yellow line potentially passing through central Armenia), this becomes a valuable North-South corridor that benefits Russia, Iran, as well as Armenia. Even though Georgia could potentially benefit from this North-South Pipeline, simple economics dictate that the benefit they receive from the East-West routes, along with other economic stimulus funds from the West are too good to give up.