Considering all the different guys teams had defending him, he led the team in plus-minus ratio. Usually you'd want to keep a guy like that.
If they let him go, Raymond Felton (who played terribly last year and isn't as good as he once was, at best) Jason Kidd (what is he, 50?) and if they resign him, Baron Davis (LOL gtfo with that shit) are your replacements. Safe to say Lin is the best choice.
Plus the fanbase was finally excited about something. Why not keep him for the sake of the fans?