Do it in person.
When you sit down with your boss, just say you have accepted another opportunity at blah blah doing blah blah. You regret the tough spot you're putting the team in but you are excited at the opportunity as it allows you to blah and balh with your career. You are happy to help in anyway in the transition, interviewing a new candidate over the coming weeks. *Then ask how he would like to inform the rest of the staff. If you meet regularly, do it at a staff meeting. If not, send around an email saying essentially what you told your boss.