Bill Parcells sent Leigh Steinberg a letter dated December 31, 2007, that the Dolphins would renew the option on his contract. He's slated to make $730,000 in 2008.
Details are sketchy but the fact that his option was picked up by the team tells me that it's essentially a year-to-year deal with no guarantees. He'll have to make the roster to earn the bucks but all reports are that following discussions with Parcells, Williams is motivated to return to elite back status. Whether he can do that at age 31 (when the season starts) or not remains to be seen.