In short, this is a smart move, because it allows the Spurs to match any offer other teams make if they want, but doesn't immediately commit them to doing so. Restricted free agency is awesome, because it lets the market set the value for a player. It backfired on the Clippers when Deandre Jordan was an RFA, because Golden State offered to overpay him and LA matched. I don't foresee that being a problem with Mills in particular (although he is likely due for a raise). Green, though, could be offered a deal in the 3-5 million per year range. I think anything in the lower part of the scale would be matched, but anything much higher and we likely let him walk.
That's just speculation, though. For what it's worth, both have stated they love playing in San Antonio, but they owe it to themselves or their families to find out how much they are worth. It is a business, after all.
Edit: Big50 had the following to say: "Project Spurs has more information that you can see here. According to PS, the Celtics have been rumored to be interested in Green. I think that says something about Green and who is interested in his services. I think the Spurs would be better off with bringing Green back and hoping that he can improve upon his solid play this year. That said, I think the Spurs would be ok, if Green bolts for more money.