Bill Barnwell of Grantland wrote a nice piece on types of free agents that often end up as busts:
Spending more than a million dollars or so on a running back in free agency, though, has mostly been a fool’s errand. Last season, the Bears and Chiefs gave free-agent backs Chester Taylor and Thomas Jones, respectively, a combined $10 million for the 2010 season. They were the two least productive running backs in football.
They also talk certain wide receivers and defensive players. I think overall the article is spot on, but the real crux of the argument is simply to avoid guys coming off of career years and always assume regression to the mean. This isn’t always easy as fans demand results, but this article is sure full of examples of the high failure rate of this strategy.