While, I agree with A&M that Favre mishandled his retirement, I don't think Peyton will go that far. And while some point that his arm strength isn't what it used to be, and I do agree with that to an extent, he hit more downfield vertical passes the past two seasons than some of his latter seasons with the Colts, so relative to other league QB's, I think his arm strength is not really an issue. He hit on more downfield passes with quite excellent accuracy recently until...about a month ago...when he tore his quad.
I think he is and should come back next year. He wants and needs another ring. With the right hire, and a couple moves, Denver is close. And we have to ask this question? How many teams in the league with the current personnel they have, would give their left nut for a QB of his caliber? When you can say that, they maybe it's not time to retire. Not like he's throwing 50/50% TD/INT like Favre was at the end.