While some feel that a Julius Peppers contract extension is the higher priority, the Keyshawn Johnson release makes the Steve Smith contract a bigger priority. The team will have to rely on him for their passing game again, and anything that will happen from here on will cost them.
If the team waits until next year, the price will only go up - though Smith missed two games, his production dropped by 20 receptions last year, and this year will look a lot more like the 103 catch, 1500 yard season of 2005. Seasons like that cost - they don't cost a year after an extension the way it would before one. He could make a Pro Bowl, regardless of numbers that high, which costs.
It's not as if Smith will have an average year, and the running game will be the main focus. 2003's offense was that way, and Smith still made that into a huge year for himself. Injury, should it happen, won't make the price go down, either. The longer the team waits, the more the price will go up.
The team owes Smith, who signed in 2004 having only proven himself one year, a new contract. No question. There's also something to be said for signing when the market is right, and this year the market isn't ridiculous for receivers. Before rookies like Calvin Johnson sign, or Ted Ginn, Steve Smith needs to get his. He deserves it, and no matter how much he deserves it, signing him now versus later gives the more sensible deal.