KG is definitely worth the approx. 11mil he'll be getting this season, probably more. The 2nd year, I'd say it's a 50/50 proposition, but worth it just to get him to re-sign. The 3rd year is a little bit mystifying to me though.
KG will be 39, making approx. 11mil. I have a hard time seeing him being at his current level, or a level worthy of that amount of money.
Thinking about if for a bit though, I think this contract is going to be structured rather differently than most. I would not be surprised if the contract is non-garaunteed the 3rd year. By doing so, you can start the contract at a lower value intially, and then add in raises of 7.5%. Also, I wouldn't be surprised if there is a signing bonus involved (15%). By not garaunteeing the 3rd year, the bonus would be split across only the first 2 years for cap purposes (paid up-front however).
It might break down like this:
1st yr-(9.25+2.24) 11.49 cap hit
2nd yr-(9.94+2.24) 12.18 cap hit
3rd yr-(10.64) non-garaunteed
The total would be 34.31 but only 23.67 would be garaunteed, with 4.48 due basically today. It's just a theory though.