The Arab chooses prison because the known is far less intimidating than the unknown. The choice for personal responsibility is a weighty one and shunned by most people who would prefer a life of answers to uncertainty. There is no other reason for the Arab to chose as he does.
As Daru and the Arab reach the precipice, both literally and spiritually, the Arab is given everything he needs to survive: food, money, liberation. Yet taking the path to freedom is fraught with peril. All of his life, Daru has secretly believed that people, given the choice, would select a life of their own choosing, as he had done in his solitary existence. Yet his hopes are dashed when the Arab selects the easier path rather than the harder one. This is why, "in that slight haze Daru with heavy heart made out the Arab walking slowly on the road to prison." He had hoped for independence and discovered instead a deep dependence. Daru is lonely, and wants to believe others would choose loneliness too over servitude. He was wrong.