By Simon Perry and Michelle Tauber
Updated April 30, 2007 12:00 PM

He was about to officially become a single guy for the first time in nearly five years, and Prince William was in the mood to let down his royal guard. Ordering drinks and chatting with a group of buddies at the London bar Mahiki on April 13, the young prince “was very smiley, rocking his head to the music,” says Olya Popova, 24, who was at Mahiki with her friends. Although he hit the dance floor around 2 a.m. with a blonde patron, for the most part “he wanted to have a good time with his mates and try to avoid the girls,” says Popova. “The girls tried everything possible to get his attention. They were quite pushy and he didn’t appreciate it.”

Note to the world’s most newly eligible bachelor: Get used to it. The day after his night on the town, William, 24, and his longtime girlfriend Kate Middleton, 25, confirmed through a mutual friend that they had “amicably” split—a stunning breakup that shocked fans, friends and veteran royal-watchers alike. This was, after all, a couple whose seemingly storybook pairing inspired the kind of intense engagement speculation that comes with its own set of commemorative wedding plates. With her impeccable poise, down-to-earth charm and princess-ready style, “[everyone says] how good Kate was for him, but I think they were good for each other, really,” says a Middleton pal. “It’s sad.”

And so, with a collective sigh of disappointment—no Westminster Abbey wedding, no bouncing royal babies—the fantasy of Prince William and Princess Kate reached its unhappily ever after. (Oh, and don’t bother looking on eBay for those plates—they were designed but never produced.) Friends of the couple who spoke with PEOPLE agree that there was no last-straw moment, but rather a gradual unraveling that concluded just before Easter. “They are both upset,” says a mutual pal. Adds a friend of the prince, who since mid-March has been training at a British army camp in Bovington, some 125 miles west of Middleton’s home base in London: “They met, had a long and strong relationship, but now it has ended.”

Why? Those who know the pair cite a variety of reasons for the split, beginning with the prince’s famous declaration in 2005 that he couldn’t imagine getting married before age 28. In recent weeks he seemed to drive that point home: In addition to his night out at the Mahiki—where British tabloids reported that he and his mates rang up an approximately $22,000 bar tab—the prince was snapped posing for cell-phone photos on March 25 with his arm loosely draped around student Lisa Agar, 19, at a nightclub outside of Bovington. Although Agar denied that anything improper had gone on, sources close to Middleton—who works as an accessories buyer for the British fashion chain Jigsaw in London—say she was troubled by the incident and had been cautioning friends that things might not work out. “She knew that he was not ready for marriage,” says an insider, noting that she was still “surprised” when things ended. “Here was a guy hanging out in nightclubs without her—she knew he was not ready to settle down.”

As for William, friends say that his full-time military post as a 2nd lieutenant—he works five days a week and bunks in the officers’ mess hall—has bred a certain boys-club mentality. “You are expected to be on duty for so much of your time,” his pal says of army life. “And then the question comes: Do you spend the little time you have off with your girlfriend or your friends?”

Despite speculation in the British tabloids that he was forced by the royal family to either commit to Middleton or sever ties, a source close to William—who is reportedly set to receive $600,000 or more from his mother’s estate when he turns 25 on June 21—says that no such royal decree occurred. Which isn’t to say that the Queen didn’t weigh in, counseling her grandson that he should not be pressured into an engagement by the media. Yet any decision William made is his own: “He is a strong character,” says a friend, “and won’t be told what to do.”

Neither, it seems, will Middleton. Although she has been consistently “sensible and brave,” as one source notes, she had also tired of the relentless public scrutiny and media harassment that comes with romancing the future king of England. “She is a classy person and went through [the media firestorm] because she loved him,” says another insider.

One of three children raised by Michael, a self-made millionaire who runs a mail-order company, and his wife, Carole, a former flight attendant, Middleton met William at Scotland’s St. Andrews University in 2001. The following year the couple moved in together with two other students. And yet the romance that thrived in the close-knit environment of student life—despite two brief breakups in summer ’04 and fall ’05—may have suffered after graduation in 2005. Says a friend: “University relationships that continue on into ‘normal life’ are always challenging.”

Still, until recently both William and Kate seemed up to the task. In December Middleton scored a coveted seat—accompanied by two of William’s closest pals—at the prince’s graduation ceremony from Sandhurst military academy, sparking a new set of engagement rumors.

Members of the prince’s inner circle dismiss talk that Middleton’s lack of blue-blood breeding—much was made in the tabloids of her mother’s gum-chewing at the Sandhurst graduation—was a source of tension, and Middleton has had no trouble holding her head high in the days following the breakup. “She has her family and she’s getting through this as well as anyone could,” says one of her friends. Adds another insider: “She knows [the split] was the right thing.”

But was it? Those close to both of them aren’t so sure, expressing disappointment that Middleton—whom one friend of Will’s describes as “an incredibly nice girl, straightforward, a diamond”—is out of the picture. “[His friends] like her very, very much,” says a friend of the royal family, who also had signaled their approval by inviting Middleton into the royal box at the Cheltenham race course this time last year.

But for now, at least, William appears focused on his work—he will remain in Bovington through August before continuing his career in Windsor—and on making the most of his bachelorhood. (He needn’t worry about his ex selling her story—no doubt worth millions—says Middleton’s old school pal Gemma Williamson: “She would not be the one to spill the beans or rinse him for his cash.”) Back out playing the field, “maybe he will find the grass is greener, but then maybe not,” says the family friend. And many friends hope there will yet be cause for that commemorative wedding china. “I don’t think it’s really over,” says a Middleton pal. “I don’t think this is the last you’ll see of the two of them.”