It's all in the war aims. From what I've seen coming out of New Dehli, they want the Pakistani government and won't be satisfied with anything less. When (not if) they lose the initial battles, the pressure will be extremely high on their government/military to use nukes to turn the tide (though in reality, they probaly have enough space to trade for enough time to get a military that knows how to fight).
Even if India is successful in toppling the Pakistani regime, what's there to replace it but some group with a REAL blood-lust that won't be satisfied until they're dead, so even if the war doesn't go nuclear before India manages to make any serious inroads into Pakistan, it will once they do.
Pakistan may just have blinked.
Agence France Presse is reporting that Hafiz Mohammed Saeed, the leader of Lashkar-e-Taiba, has been arrested in Pakistan.