if they are on a deal that expires in 12-24 months they are in the shop window and need to impress - either to remain with the club and get an extension, or to make sure they get another club that wants them.
And if they do impress to the extent that other clubs are interested then they can leave on a free, opposed to either cashing in on them now while their stock is high, or 'rewarding' them with a new deal.
Just because certain players have had a downturn in form doesn't mean that every player will and I don't think that it is a good enough reason to allow players into their final year of their contract.
The risk is too high. Ideally, I'd say we need to get a younger players tied down to long term deals before they get anywhere near their final year. Imagine poor Diddle if Lee leaves, let alone on a fee!