Peters isn't stupid enough to sit-out the whole season. If he doesn't report prior to the start of this season, he'll probably sit-out until week 10 to get that year's credit towards his contract. By that time, his fine of $430K plus the Bills going after $1.5M in signing bonus, plus probably not playing him (since he'd be useless to them) and thus not earning any playing bonuses, especially at LT, will end-up making him owe the Bills money. Then next season, there ain't NO way the Bills are giving him a big new deal. So the process will repeat itself over again. And then when 3 years have passed, the Bills will franchise him and trade him (and then have to worry about a hold-out from future-Pro Bowl LT Demetrius Bell ).
Basically the Bills have Peters by the... The problem for him, as several have mentioned, is that his agent doesn't give a rat's Eugene Parker about him, and Peters is too dumb to figure out that sitting out is the worst thing he could do. But some people need to live and learn. The hard way.