Pudge should definitely not be dropped. Piazza and Pudge are the only sure fire performers at catcher, when they're not hurt. If you can trade him for a next tier catcher, a la Lieberthal, etc, and some other position you need, I'd go for it, but if you can't get a decent deal with him, better to hold onto him.
Someone out there who has two second tier catchers would probably be willing to take the risk on him. Just make sure you get a lot in return because there are so few good catchers out there and none compare to Pudge and Piazza.