I don't know whether he broke the law or not. Because we're talking about international phone communications, I would think it to be a "gray area". The fed can tap your phone to ensure you aren't using those connections for gambling purposes or to make drug deals; in many areas, this is little different.
What disturbs me the most, though, is the "lag time" in this story. IF Bush broke the law, then not only HE, but the senators who knew, AND the reporters who knew should be indicted for conspiracy. If heads are going to roll, they need to roll from other places BESIDES 1600 Pennsylvania Avenue.