We've all been thinking and talking about this, so I thought I'd take the time to lay it all out.  Looking at the contract situation, there are five guys the team is definitely getting back (Arenas, Young, Thorton, Blatche, McGee). That's it.  Then there's Quinton Ross, who has a player option which he'd be foolish not to take. That means the Wizards have the following roster spots committed, by position:

PG: Arenas

SG: Young, Ross

SG: Thorton

PF: Blatche

C: McGee

At a minimum, the Wizards need to have 13 players on the roster. There are several guys that the Wizards have the option of keeping/adding next year.  Those are:

• Randy Foye, Josh Howard, Vladimir Veremeenko, Emir Preldzic. 

Then there are the unrestricted free agents that the Wizards have on the roster, and could potentially sign next year:

• Mike Miller, Fab Oberto, Earl Boykins, James Singleton, Mike Harris, Shaun Livingston.

In addition, the Wizards have three draft picks in the 2010 NBA Draft. (Something like 8th, 30th, and 38th).

Putting this all together, the Wizards have to consider the following options next year to fill 7 to 9 open roster slots, not counting signing other teams' free agents:

PG: Foye ($4.8M), Livingston, Boykins

SG: Howard ($11.8M), Miller

SF: Harris, Preldzic

PF: Singleton

C: Oberto, Veremeenko

TBD: 3 draft picks

First, let me state what I hope is obvious.  Howard will not be worth $11.8M next year, recovering from a career threatening injury.  Taking that option would only make sense if you hoped to use it in a trade (I don't see how that helps when we're under the cap, but maybe I'm missing something). Also, resigning Oberto on this team doesn't make any sense.  He contributes nothing, and is declining.  I'm betting that Miller won't be interested in returning to the Wizards.  In addition, Veremeenko and Preldzic are unlikely to be playing in NBA games next year.  Finally, even though I could see the Wizards doing it, I'd argue that re-signing Boykins would be idiocy.  That leaves Singleton, who I think the Wizards should re-sign, Foye, whom the team should make a qualifying offer to, and two complete unknowns in Livingston and Harris.  Now I have this:

PG: Arenas, Foye, Livingston (?)

SG: Young, Ross

SF: Thorton, Harris (?)

PF: Blatche, Singleton

C: McGee

TBD: 3 draft picks (~$4M)

It would take approximately $40M to pay these players, with 13 roster slots filled, and two potentially available to use on smart free agent signings.  I'd really want to trade Arenas, but for now I don't know how that's going to happen, so to keep the conversation manageable I'm assuming that's not happening before next season begins.  The glaring needs for the draft and free agency are for a starting SG, and a starting or backup C.  Upgrades are needed at every position but PF, and even there we could use more depth.  What can be accomplished with the remainder of this season is figuring out whether Livingston and Harris are worth signing next year.

So the question I'm left with is how do we use those picks, and who might we sign in free agency?  For the sake of argument, I'm assuming Harris and Livingston are worth keeping on the roster at the league minimum, and will each be useful as third-stringers. 

• Draft:  With the lottery pick, Cole Aldrich could be the center the team needs, or Al-Farouq Aminu could solve the SF/PF depth issues. James Anderson looks like the best SG prospect that will be available.  Then the team should use the later picks on a big banger and a guard.
• Free Agency:  Look for bargains on younger guys that fill needs.  Maybe a guy like Craig Smith if front-court depth is still needed.  Maybe nab Anthony Morrow from the Warriors if he can be had relatively cheap (the Wizards definitely needs a shooter).
  

To me, that puts the team in great position moving forward, with good pieces to make a move to build a long-term contender after the new CBA.  Here's my (enormously speculative) proposed roster:

PG: Arenas, Foye, Livingston

SG: Morrow, Darington Hobson, Ross

SF: Thorton, Harris, Young

PF: Blatche, Singleton, Smith

C: McGee, Aldrich, Aaric Murray

For something like $48M, leaving some cap space to facilitate in-season trades.  That looks like a very interesting 35-win team that would get significantly better even without the additional draft picks and free agent(s) that would be added the next year.  The elephant in the room is Arenas and his contract, but that's a conversation for another day.