Dyamios said:
So what decides whether the cat is dead or alive?
As so many puzzling items with quantum theory, this is again an interpretation-dependent issue - if you want to get physicists to get emotional, talk them about the interpretation of quantum theory !
What's the facts ?
The fact is, that if we prepare a system in a certain way, and later, we observe the system, that we can observe different possible outcomes, and we have a formalism that allows us to calculate probabilities of the outcomes. That formalism consists of two parts:
the "in/out" part, and the "internal" part.
The "in/out" part consists in saying what is the exact starting condition and what are the different observable properties we're going to measure. This is usually something we put in by hand. We usually SAY (without much justification) that the initial state IS "the particle is in an energy ground state" or "the particle is at that position" or something, and we SAY that we are going to MEASURE THE POSITION OF THE IMPACT on the screen.
The "internal part" is then the Hilbert space formalism + unitary time evolution (= Schroedinger equation) part.
The link is the following: we say that the initial state corresponds to a certain state in the Hilbert space (for instance, a specific position state), and we SAY what are the different possible outcomes of measurement (the different screen position states).
We then calculate the matrix element of the time evolution operator, for the considered lapse of time between setup and measurement, between our starting state and one of the output states, square this, and this number is then the probability to observe said output.
And this usually gives good results.
So, from this algorithm, you can calculate the PROBABILITIES of you observing your cat live or dead, if you SPECIFY YOURSELF that you are going to start with a state which is "living cat" and that you are going to observe the states "living cat" and "dead cat". It is YOU WHO PUT THIS IN BY HAND.
And now we come to the interpretational issues. As I said, if you want to find one thing over which there is much disagreement, arguing and shouting, then it is this ! I have of course my own preferences on the matter (which are of course the only correct ones

) but I'll try to look upon the issue from different viewpoints.
The interpretational issues all turn around the "in/out" part, not about the unitary part (for most of them).
One viewpoint is simply that THIS IS IT. Quantum theory is just a trick to allow you to calculate probabilities of outcomes of experiments. Of course you have some irreducible "intuitive" part, specifying the in/out parts and so on, but that's just the way things are. So it is an irreducible intuitive concept to say that cats can be live or dead, and to say that these are the states you are going to work with, and all the rest is just the internal machinery of an algorithm, which cranks out : 1/2 chance for a live cat, and 1/2 chance for a dead cat.
The Copenhagen interpretation goes in that direction. It is said that the observed macroscopic universe is *strictly classical*. All concepts we can talk about are classical concepts and they are the only ones that make sense. Classically, you have of course only live and dead cats. Quantum theory describes some interaction between the classical universe and microscopic properties, which are not really existing in any objective way, and these interactions are measurements ; the famous in/out conditions above. This is why Bohr insists on not talking about the position of an electron, say, but only about the initial and final (classical) state of the electron.
Von Neumann changed things slightly. He divides the world in two kinds of objects: measurement apparatus and systems. Systems follow quantum theory and their state is really given by the wave function, measurement apparatus on the other hand can only be in classical states, and upon interaction between the two, the measurement apparatus forces the system in a classical state (projection). However, von Neuman notes that we have a large lattitude in our determination in what exactly is a measurement apparatus. Anything macroscopic can do, or a human can do, or a brain can do. It doesn't matter exactly where the separation is made.
So from this viewpoint, you have the choice. You can say that a cat is a measurement apparatus. In that case, cats can only take on classical states, such as live or dead, and cannot be in a superposition. The cat will then be in one of both upon her interaction with the poisonous system, and will never be in a superposition (it being defined as a measurement apparatus). You can also say that the cat is a quantum cat, and then it will be in a superposition until you observe it. You pick your choice.
Everettians (Many World Interpretation), with all their different variations (for your information, that's my preferred version of the story) simply say that ALL systems are quantum systems, and that ALL results are obtained: so not only your cat ends up in a superposition, but also your body. However, observers are not objects (such as cats or human bodies) but STATES. So "you" (as an observer) is just ONE of your body states (which one ? Randomly!) and as such you are only aware of one result.
As such, after the experiment, there is now a cat-body in two states, and (as far as cat-experiences exist) two cat-observers or cat-experiences, one which is dead and one which is alive... probably the dead one will not observe much anymore. There is now your body, in two states, and hence two you-observers or two you-experiences, one of which has seen a live cat, and the other a dead cat. "you" consciously being one of them, you observe one or the other. No matter how crazy this can sound, it is an entirely self-consistent picture.
Other views are often a variation on one or several of these themes. Some say that the entire reality doesn't really exist, what only exists are your observations.
And then others turn to equivalent, but different formalisms, which do not have these issues (in which there is not this superposition). The most known ones are the Bohmians, but they run into serious difficulties with relativity ; in fact they have to return to ether theory. Their theory is very much Newtonian + extra "quantum" forces which are somewhat strange, but generate equivalent predictions to standard quantum theory.