He did have the best season out of his 4 years in the Yankees last year but there are some causes for concern. First of all he's getting up there in years. He is 36 so it's tough to say how long he will be effective for. Looking at his data in Ron Shandler's baseball forecaster indicates a couple of red lights. First, his contact % dropped down to 82% last year (it hadn't dropped below 85% in any of the previous five seasons).
Another red light for Damon is that his Home Run totals were a bit fluky. His hr/fb% was 13% last year which is the highest it has been in the last five years (this figure has ranged from 6 to 12 percent. Also, there is the elephant in the room known as he's not going to have that short porch at Yankee stadium to lodge home runs in to.
He hit significantly better at Yankee Stadium .279/.382/.533 than he did away from Yankee Stadium .284/.349/.446. Point being it's more likely for him produce something close to his road numbers than home numbers in 2010. A solid player you can bank on for a .280 average and about 15 home runs but not someone a team should overpay for in a multi-team bidding war.