It's a no brainer to offer the QO, but there is absolutely no reason to go long-term on a pitcher like Santana unless he is willing to do a short (2-3 yr) deal at significant below market value, which seems highly unlikely considering Santana's past negotiations with other teams. While I like Santana, and believe he is a quality pitcher, and we need some inning eaters in the short-term to go with our young guns, there is no reason to tie up money in a pitcher like him at his age in the budget, considering our constraints.
I don't know what the market will be for Santana and how much interest he will garner, but I would perfectly be happy with a BJ for Burhle move, along with bringing back Floyd and Medlen to incentive laden deals to fill out the rotation and create depth.