There is just no room and no reason to keep Suppan and Vargas. For that matter, there is no reason to keep Doug Davis. The above 12 are the best arms the Brewers currently have. I suppose the jury is still really out on Capuano but keeping Suppan and Vargas around while losing the possibility of an arm that can actually contribute is foolish.
We'll see how Melvin actually plays it. I'm guessing there is no way he swallows his pride and jettisons Suppan but as I am the constant pessimist, I'd love to be proven wrong.