Should Sox have extended Schilling?

With the return of Notes for the 2007 season, I'd like to start off with the hot topic on Boston sports radio: did the Sox make the right decision in declining Curt Schilling's offer of a one-year extension at the same $13 million he's making now? I think everyone would agree that the 2006 Schilling is certainly worth $13 million, but what can we realistically expect for a 40-year-old pitcher over the next two years? Schilling did slow down a bit late in the season last year:

Month   ERA    K/9   BB/9  HR/9  K/BB
April   2.88   8.9   1.5   0.89   5.71
May     5.23   6.9   0.6   1.65  12.50
June    2.58   8.1   1.1   1.1    7.40
July    4.74   8.5   0.9   1.66   9.00
Aug     5.22   7.5   1.4   1.36   5.50
Sept    1.50   9.0   3.0   0.00   3.00 

Much has been made that he supposedly showed up a little fatter than expected to spring training, but it remains to be seen if that's really an issue. If it was a question of whether to extend him for this season at that money I don't think there would be an argument, regardless of his numbers in July and August, but that option vested when the Sox won the Series in '04.
I think you're likely to see a very similar season from Schilling in 2007, with a slight decline. I'd expect a 3.75 ERA, a few less strikeouts, but continued success at avoiding walks keeping him as a top 25 pitcher. What do you think?