The Japanese were prepared to surrender, however the US wanted "unconditional" surrender.
The Japanese interpreted this as the US would come in and take the Japanese not murdered and raped as slaves (similar to what the Japanese did to their victims). The Japanese had no choice but to continue fighting on, such a demand ensured the war would continue.
In end the Japanese did surrender conditionally and the Emperor remained...
As stated in posts above, the impending Russian invasion had more influence in the surrender to the US than did the atomic bomb, however, the US needed to demonstrate to the Russians what it could do with the bomb. I even recall hearing somewhere that due to a lack of communications, the Japanese leaders were not aware the atomic bombs were dropped until sometime after the decision was made to surrender.
