I think it's a good move for the Cavs: they don't give up much in the way of value, they don't lose financial flexibility, and they bring in one of the true greats. That said, we sit here and worry about Ray Allen at 34 years old and Ray Allen is a relatively normal sized human being in excellent shape. Shaq is a freak of nature and has a body just waiting to fall apart.
Also, while he is an upgrade on Big Z, this pretty much destines the Cavs to be slow. In the past, they'd sometimes mix it up at the 5 spot, and go with Varejo, and speed up the game. That's going to be very hard to do now with Shaq and Big Z both demanding minutes at the 5. Also, I don't think they're going to play them next to each other very often (it would be a defensive and spacing disaster), so I'm not sure the upgrade is as dramatic as it might seem on paper.
It's a good, but not great move for the Cavs. I certainly wouldn't be designing rings for them anytime soon: I still think the C's are the better team.