I think it is the place for him. He is the face of the Wizards in the post MJ era, and he is a big reason (along with Jamison, Butler, and Larry Hughes) why Washington is a legit perennial playoff team instead of the doormat of the NBA that it was throughout the 80's and 90's.
Besides, people give Arenas a rap for being a "shoot first" PG or a "SG in a PG's body". There is no such thing as "true position" in my eyes. He's just a great player, and helps the team win, and the best role for him in DC is as the point guard, or the engine of the offense, whether he scores 50 or dishes out 10 assists. And after all, Jamison AND Butler (Hughes in 04-05) all are 20 ppg scorers too. With Arenas, Jamison, Butler, Stevenson, and Haywood, the Wizards are a fast tempo team like what we saw in most of 2006-2007, and with the somewhat better defense of last year, they can be a force.
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