£16m a year over 5 years isn't that much for an F1 champion, i think Schuey was on more than that a decade ago.
Button's current contract has an option where McLaren can extend it so that Button is there in 2012. Given that Button and McLaren are so happy together, I find it amusing that McLaren haven't taken up this option yet. Instead they want him to sign a multi-year deal now because otherwise Ferrari could easily poach him in 2013 (and they would almost certainly pay him more). I think Button wants to keep his options open, which is a very sensible thing to do.
What driver wouldn't love to feel valued enough to have a top team offer him that kind of money and security for the rest of his career? Actually how many drivers have been offered that? Very thew is my guess
I'm pretty sure Hamilton was also offered a life contract by McLaren. Having said that, he was also offered a McLaren F1 if he won three championships with them.