There are any number of ways to handle an expansion draft. Seems to me the most important detail is to keep the current managers involved in the process. Come up with two or three options that all could be considered fair, and let your other managers decide. That way no one feels cheated, even if any one manager doesn't love the exact system you chose. "Majority rules" is always a fair way of making such a huge league change, and you will really avoid any bitterness.
As for what kind of options to present... a couple of good ideas have already been posted. It depends on how much importance you want to place on league parity vs butthurt managers getting to keep their favorites. If I were running the league, I would:
1. have the Original Managers keep three keepers
2. let the new guys pick one player each
3. let the OMs keep one more player from their roster
4. let the NMs pick two players each
5. OMs keep one more player (5 total keepers)
6. NMs pick two more players (5 total as well)
7. Start the draft however you would do it if there were no keepers at all.
But ultimately you just need to do what seems fair. Try to imagine it from both the new guys perspective and the om's perspective. Odds are that if both sides feel like they are getting shafted slightly, you've got a fair plan.
As of 8/4/13
C:Napoli 1B:Goldshmidt 2B:Kinsler, Gyorko SS:Tulo, Profar 3B:Longoria, Machado, Middlebrooks OF:Harper, J. Upton, AGon, R. Davis, Venable SP:Scherzer, Minor, Ryu, E.Santana, Beachy, Samardzja, J.Johnson (DL), T.Ross RP:Perez, Rodney, Farquar