Jake Peavy is a great pitcher. He is a great pitcher in the national league. He is a great pitcher in the national league west pitching in such ballparks as Chavez Ravine, SBC (PacBell?) Park, and calling the incredibly spacious Jack Murphy Stadium his home. Jake Peavy is a great pitcher in the relative obscurity of one of the smallest media markets in all of baseball and in arguably the most laid-back atmosphere of any MLB team.
Going from the NL to the AL is worth a half a run per game on a pitcher's ERA.
Going from the NL West to the AL East is worth at least another half a run per game.
Being a star (which Peavy definately is) in San Diego is a whole different planet than being a star in NY. The pressure and attention is bound to effect his performance at least for the short term, if not longer.
Assuming an otherworldly 2.50 ERA as a Padre, and adjust for the inevitable increases for league change and division change, it would be smart to assume a 4.00 ERA if not higher. Adjust the ERA from a simply great 3.50 and Peavy would be another disaster for Cashman.
I think Jake Peavy is a great pitcher. Do we really want, however, to trade a huge bounty of prospects for a guy that we hope will have a 4.00 ERA?
When you weigh the cost in terms of talent that the Padres would (rightfully) be asking in return, I think the Peavy trade is one that the Yanks should absolutely avoid.