Gordon Edes talked to Ortiz and reports that it's not true, although the team and Tiz continue to have what Theo Epstein called "quiet discussions".
To date, Ortiz (now 30 years old) has been one of the best bargains in baseball history:
Plus he's 1-for-1 in stealing bases with Boston!2003 $1,250,000 .288 .369 .592
2004 $4,587,500 .301 .380 .603
2005 $5,250,000 .300 .397 .604
2007 $7,700,000 (club option)
If an extension like this is signed -- and there is no way the team will let Ortiz walk -- it would include the 2010 season, at which time Ortiz will be 34. This seems more than reasonable. Hell, a face-of-the-franchise superstar in his early 30s -- a huge asset both on and off the field -- is someone you can overpay (though I'm not sure this even qualifies as overpaying).
You could think of it as the team showing some good faith and giving Ortiz some of the money he "declined" when he signed that two-year extension for a measly $12.5 in May 2004. God knows how much more dough he'd command as a free agent at the end of 2007 (what do you think the MFY would offer?).