Pretty much yes, most statistical measures put him between 3-3.3 WAR last year ans projected to be around 2.5 WAR next year, Fangraphs puts the value of 1 WAR at about $4.5m, meaning 12.5 is just a touch over projected fair value.
The only way the Sox don't pick up the option is if they a fairly sure they will ink him to a 2-3 year deal for slightly less ( say 2-22m or 3-30M)
Considering they likely will lose either or both Martinez and Beltre, it makes sense to bring Papi back as the DH. Someone has to be a HR threat in middle of order.
the formula for winning doesn't include big overweight guys that might hit 40 home runs, steroids are gone just ask the giants. papi is a fan favorite so they might re sign him. to win they need beckett and lackey and the bullpen to show up like they have in the past, if not it won't matter who is in the lineup.