The plan for Pettitte that makes the most sense to me is to have him join the team at some point after the 2011 All-Star break, then retire. This would give him the farewell tour, if he wants it. It would also increase the chances that Pettitte's body would hold up without injury through the end of the season. Pettitte's spot in the line-up could be held for him by one of their minor-league prospects — Pettitte could replace the prospect just as the prospect hit his "Joba Rules" innings limit.
I have no idea if this plan makes sense to the Yanks or to Pettitte, but it makes sense to me.