I think Josh is a brilliant Clubman and he's been a great servant for Wasps, he's consistently solid and works supremely hard in both defence and attack.
That being said, he's 28 and with little chance of an England call-up, this is probably his last chance of a 'big' contract and I wouldn't begrudge him for taking more cash or be overly upset if he left. I'm not convinced he's worth keeping at all costs for us or a bumper contract even if Lima going frees up some cash.
Watson has had some brilliant touches and flashes in games but equally hasn't had the same consistent game time as Josh. Between Marcus, Sirker (with his promise) and now Crossdale not to mention Paolo when Fekitoa is back fit and firing we're pretty well stock at Wing and that's without considering Miller (if he stays).
Personally, although he's not renewed i'd be fairly surprised if he went, especially with a young Family and being pretty settled in Cov and a big part of the team.