He is a FA, and while I'm sure the Pats would love to keep him, they certainly won't overpay for him with Ben Watson emerging as the team's go-to TE in the passing game.
Graham's value on the open market is tough to gauge. Graham would instantly help any team's running game, but while he is more than capable of contributing in the passing game, his receiving numbers have been underwhelming. Thus, a team looking for a flashy sign may be unwilling to pony up big bucks for him. The Pats may be able to retain him simply because other teams will be unwilling to overpay for a guy whose best attribute - run blocking - doesn't make for an exciting sign.
Drafting two TEs in the 2006 draft, though, may have been an indication that the Patriots feel Graham will be moving on after the season.