it depends on the skill and legendariness
a guy like Wand should be kept around as long as he wants, he's an entertaining fighter and has done enough in the sport to deserve the right to fight in the UFC and retire when he wants. Of course, don't try getting him on a title run, but put him in there with guys who you know will make for an entertaining fight with him.
Guys like Lauzon and Lytle are skilled fighters too. While I don't think anybody ever expected them to hold gold, both were good fighters who could make fights competitive with elite fighters. They deserved to be kept around because they were entertaining and even possibly worthy of the top ten.
a guy like Garcia though, should not be kept around, he's not a good fighter and he doesn't really have that "legend" ring to his name.