Remember that Soriano also had several good years as an elite setup man BEFORE becoming a closer, and Hanrahan got rocked the second half of last year, walking everyone.
The problem here is that every relief pitcher is a major risk. Remember BJ Ryan? He had a very good pedigree, signed a huge FA contract, and bombed. Remember Brad Lidge? K-Rod? Francisco Cordero?
All of those guys had good track records and succumbed to injuries/ineffectiveness throughout the life of their contracts.
That is why giving that contract to Papelbon was riskier than any other move the Red Sox could have pulled off during that off-season. People with no foresight refuse to see it that way, but Papelbon is just another pitcher who could get injured at any time like any other.
For the record, so far this season Papelbon has exhibited the lowest fastball velocity (92.2) and K rate (5.54 K/9) of his career. Let's see how that contract looks next year.
Nathan, had he bombed, would have been gone after the season, just like Hanrahan and Bailey will be if they don't get their s*** together. Soriano would've probably signed a two-year deal had the Sox been aggressive, so he wouldn't have been a long-term commitment either.