Theirs a few effects of this trade that would go beyond the direct exchange of the players. First of all, it frees up 6 million dollars for another free agent. It won't buy you Manny Ramirez but it gives you enough for Rocco Baldelli.
Baldelli is a big risk and probably won't be as good as Nady. However, dealing Nady allows you to move Damon out of center, to left where he is actually pretty good. Any combination of Baldelli/Gardner/Melky also promises to be well above average in center. This is a big difference in the field from Damon/Swisher in center and Nady in left. Enough to overcome the loss of hitting? Probably not but its fairly close and if the Baldelli gamble pays off then its almost definitely an upgrade. The loss in the outfield is real but not truly significant.
They`d also be getting Jonathan Sanchez. He`s a 26 year old lefty with great stuff. His numbers look bad on the surface but when you look closer they`re actually pretty good. In his first full year in the major leagues last year he had an RCA of 4.40. His biggest problem is that he walks a lot of guys but he gets enough strikeouts to compensate. He will learn the control as he gets older and has the potential to breakout next year and be a top-line player for years to come.
All in all, if the Yanks are looking to trade an extra outfielder then this trade might make a lot of sense for both sides.