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Take down the blog post. It shouldn't hurt you financially (or if it does, it strengthens their case), and no post is worth the legal hassle.
I would follow up with a blog post outlining this farce!
[edited by: Lyn99 at 1:03 am (utc) on Jul 8, 2010]
do they really have me + difference between slander and libel
be sure to link that follow-up blog post to the most specifically relevant page on their site with some really good, search keyword relevant anchor text.
If they decide to sue you don't win, because it costs time and money to deal with defending yourself. Hopefully you don't regret making a spectacle out of the post.