I think everyone did what was best. Hughes took the best contract, without going to a bottom dweller. Cleveland got their borderline all-star SG they were going after. We lost Hughes, yes, but we saved ourselves from giving a max contract to a second tier at best player.
Assuming this is final, as it appears to be, we must figure out what to do now. I'm with BCH, I hope no one is expecting Joe Johnson. I believe we'd have to renounce all of our FAs (including Kwame) to clear enough cap to start offering anything near the max contract range, which is what it'd take to have any chance of Phoenix hesitating on matching him. Simmons is more realistic, though I'm not sure how he'd feel about us -- would he still be happy that we gave him his first opportunity in the league, or would he not want to come back after us letting him go? I think it's worth looking into at least though. I still think Hayes can be a decent starter in this league, but if we go into next season with him as the only option at SG, it's going to be a pretty hefty dropoff.
We can certainly look beyond the two extremes, see what's available beyond the cream of the crop and staying in-house. However, a quick check of
Sportsline's top SG FAs leaves me pretty darn underwhelmed. Cuttino Mobley, DeMarr Johnson, Willie Green? The fact that Dixon is in the top ten says something about the overall quality of the pool remaining. I mean several of the guys would be okay pickups, but there's not a more than a couple guys on that list that I think would be all that better than Hayes.
Kwame becomes more important now, whether he is kept or traded (I'm pretending that us not matching him isn't an option). Remember, it was Jamison and Arenas who were requesting for Kwame to return in the playoffs, while Hughes played the whole thing cool on the sidelines. The offense is much more spreadable without Hughes, meaning Kwame could actually get some kind of opportunity on that side of the court. Granted, EJ still can (and probably would try to

) quash that idea, but it's a lot harder to justify. There's now more sign and trade options as well, because we aren't quasi-forced into taking back a big man in return for Kwame. How about Marquis Daniels? Jamal Crawford (I don't like him, but some might)? Someone else?
It certainly would have been nice to just sign Hughes to a $60 million deal and be done with it, but the world is not a perfect place. No use worrying about it now though -- it seems pretty wrapped up and done with, we need to start looking at the future.