If we are going to look at things with the clear vision of hindsight, there were a few other, bigger, things that went wrong in 2006 to preclude them from making the postseason. Specifically, Beckett thinking he could throw his fastball at all times and get away with it, Schilling being hurt, and the swath of injuries to the starting 9 (Crisp, Ortiz, Manny, Varitek, Nixon). Having Arroyo back doesn't change that, IMO. I'd say 2007 went fine without him. I'm skeptical he makes the team in 2008.
So, they spent his value on someone who didn't pan out. It happens. They've wasted suitcases of money on Lugo and Lowell (the extension). It happens.