I blame the stadium nonsense as much as anything.
I think there is really an intrinsic value as a player to have had the option and honor to both close a stadium as historic as Yankee Stadium and get the honor of opening the new one at a glamor position like Shortstop. I truly believe that if the stadium timing wasn't such, we would have begun to see a Jeter transition a year or two ago. And perhaps that would have been an argument as much as anything for keeping Torre, because he probably could have more deftly managed this transition than the Red Bull in the china shop Girardi, who's intensity probably doesn't relate to guys nutured on stoicism.
You can't possibly pay him more than 15 million, and while his production doesn't dicate he deserves that(but lets face it, the first deal didn't dictate that he earned 189 million), you probably have to keep him in the Posada/Mo range of pay. He's essential to "the brand" and these guys are more brand conscious than ever. He'll probably get 3 years, 55 million, something like that, to be a Paul Molitor type, 1b, 3b, of, DH.
The most essential element of this, and I don't know if there's anyone with a brain in the organiation who also has his ear is for him to get out in front of this. The whispers about his D have grown to screams, and I'm a much bigger Jeter fan/defender than most I think, the defensive slippage I think is overblown, I mean, Wang, a groundball pitcher won 19 games twice in 06 and 07 and was on his way to another one last year, and last years offense, well, he took a ball off his wrist in June that to look at it and HEAR it, it seemed like he'd be out for two months and he missed a game. But definatley sapped his power, and he didn't complain about it, but I think it was a factor.
That said, he's led a flawless, almost bulletproof charmed baseball life in NY. Booed only one time from what I recall during that 0-29 streak, and only really ever criticized for not defending A-Rod, who's behavior has revealed that to be really a sage choice by Jeter. He's done so well at protecting his projection of image, I'd hate to see this be a needless soap opera. Two guys, that I can recall, played a good shortstop beyond their mid 30's, Omar Vizquel and Ozzie Smith, and they were both glove first guys. Larkin kept at it, but injuries definately slowed him, but almost any other star shortstops, Banks, Ripken, Yount, all moved. Jeter can make this much easier on himself and the organization and make himself look like a hero for doing something that he has to know is inevitable.