I like the Yankees' chances to make the playoffs, but it's hardly a given, especially because we don't even know what each team is going to look like come Spring Training.
As for Cano, he has had one great postseason series, one very good series, one decent series, and three bad series. It's not like he can't hit in the postseason. Regardless, I think they need to give him a chance to fill out his potential. You're talking about him as if you know exactly what he is going to be years from now. Yes, he can struggle against good pitching, but I think the Yankees need to give him a chance to become more patient, and that should help against good pitching. Like I said, his leverage splits this year were ridiculous. There is a decent chance that those will turn around, and, if that happens, you won't mind him hitting fifth.
Now, I think the money for Matsui can be spent much more wisely. Lets look at what he'll do for them this year. He can't play the field, so that diminishes his value immediately. He won't start all nine games that they play in an NL park. If you look to give guys like Posada, A-Rod, Jeter, and Damon (if they bring him back) time at DH, Matsui might be sitting out three games a week. In my opinion, it's not worth it.
In terms of the one year thing, I agree, but I feel like someone, if it's not the Yankees, is going to give Damon a two year deal. According to fangraphs (based on WAR), Damon was worth 16.4 million dollars in 2008 and 13.6 million dollars in 2009. It's very realistic, even in this market, to thing that he is going to receive a two years deal that pays anywhere from 16 to 20 million dollars.
*Unrelated note: Thanks to E1 for pointing out the dollar values on fangraphs. I've used fangraphs in the past, but, for whatever reason, I never noticed that. It's very helpful.