One year, $3.7m deal, according to the AP wire. The key paragraph:
Meche was asking for $4.2m in arbitration, while the Mariners were countering with $3.35m.
Given an either/or between keeping Gil Meche or keeping Ryan Franklin, the Mariners made the right choice. However, they could've gotten more with less by going with Option C, since it wasn't an either/or, no matter what anyone in the front office has to say. Meche is highly unlikely to break out and turn into a quality pitcher (reasoning), meaning that the actual upside here is that he turns an ERA around 4.70 over 180 innings or so. And that just isn't special.
Nevertheless, we've known for a while that Meche was likely going to be a part of the Mariners' 2006 rotation, so it's not like this is anything new. So, there you go. No more arbitration-eligible players on the roster.
Update: ignore the part of the article I quoted - the $3.7m is guaranteed. It's just the incentives that're up in the air.