Per the Official Site:
Frost entered the 2007 offseason as a restricted free agent, but he opted to re-sign with the Redskins this week rather than go to another team.
I was down on Frosty early in the season as his punts were coming up short as our season moved weekly towards catastrophic. By the end of the year he proved himself reliable(ish) enough to keep around, and I'm fine with him as the punter.
He's also kind of a versatile Special Teamer as he can kickoff (though not very well) if/when Shaun Suisham sustains injury. I like having an open Kickoffs competition without having to actually put an extra player on the roster. He holds on Field Goals as well.
Derrick Frost does not represent a big Cap Hit, either. At 850K he is a fairly cheap solution at the Punter position; I'll take it. Welcome back, Derrick.