Since they can sign Luck to a manageable deal they actually could have both QB's on the roster, but Im not sure they are best served to do that.
How do you pay Peyton a roster bonus of 28 million and then draft Luck number 1 overall. I just don't know how they do that. I think it comes down to whether you think Peyton has 5 Peyton Manning years left in him. If you do, you trade the pick and help rebuild your franchise that needs help everywhere.
If you think Peyton is only good for 3 more years, you take Luck, and trade Manning to the Jets, the Skins, Chiefs, Seahawks, or Dolphins and get what you can which could be a late first and a third.
Considering how bad the Colts are, and how much talent they need trading Luck for multiple and I mean multiple picks could really re-invent the franchise. Also, first round picks have way more value then in year's past with the slotting system.