I've seen a lot of discussion about whether it's a good move for the team or not and whether they overpaid for a good-but-not-great complementary player (it essentially costs them the services of Shawn Marion, Anthony Parker and Carlos Delfino, although there's no guarantee they would have re-signed any of those guys anyway) but one important factor I haven't seen mentioned is whether it makes Chris Bosh more likely to stay when his contract is up next year.
Having Hedo at small forward is a definite talent upgrade for the roster, but it also sends a pretty strong statement to Bosh that management is committed to building a winner around him. Hedo developed a nice 'clutch' reputation in the postseason with Orlando, and he now has that championship aura (even though the Magic didn't actually, y'know, win a championship, but that's neither here nor there.) And Turkoglu has to know that coming to Toronto means he won't be the main guy on offense, and will be fitting in with Bargnani as one of Bosh's wingmen, so there shouldn't be chemistry issues in terms of who gets touches (at least not between Bosh and Turk... between Turk and Bargny, however -- two guys with similar skill sets -- is another question, although Hedo seemed to co-exist with Rashard Lewis just fine last year.)
This isn't just a free agent signing, it's the opening salvo in Colangelo's contract negotiation with Bosh. And it's a good one.