I think it depends how they use the DH. If they keep a 3-4 player rotation between 1B/DH I'm open to it. But I doubt he'll want less money after a good season, not to mention less playing time. Everybody will likely come out happier if they simply go their separate ways, unless Santana is seriously thinking about retirement and the change to more of a part-time role.
Personally, I think it's still too early to tell. At his age, performance can fall off a cliff fast. No reason to fret about this until January. If they wait too long, so be it. There are other players at similar cost for what he does.