It's not a question of overpaying. It's a question of what you overpay for. The Yankees made a habit throughout the earlier years of this decade up until last season to overpay for old, established veteran players who were on the downside of their careers. Obviously there's an exception here or there, but think about Jason Giambi, Johnny Damon, Gary Sheffield, Kevin Brown, etc. Those are why the Yankees had such a high payroll but nothing to show for it.
On the other hand, this past off-season the Yankees overpaid for exactly the types of pieces you overpay for. Mark Teixeira is a young talent in the earlier years of his prime and puts up tremendous numbers. CC Sabathia still has years left that will keep him at the top of that rotation. Burnett doesn't exactly fall into the worthy category of being overpaid, but if he had stayed healthy throughout his career with his potential to be absolutely dominant, one could say it's worth it.
It's not the money that the team spends. It's the quality of the player they spend it on. They spent the money on pieces that would only cause logjams and long-term commitments in the past. Now, with a signing of a Mark Teixeira, overpaying is acceptable and the long-term bind they have to him is not a problem. This off-season they spent their money on the correct players.