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I had the same thing happen with my young stud SP, who was in his final year of minimum salary. I wanted to avoid arbitration and lock him up long term, so I opened negotiations with him. He asked for $8.6 million for 6 years, so I offered him that, to which he replied, "I do not want so many years" just like your guy. He did take the same money for 5 years, though. What was really weird is that the extension disappeared a couple of months later. There was a record of it in the league transactions page, but he didn't show up in any of my team windows as having signed an extension. Luckily I noticed it in time to resign him to the same extension.
BTW, it now looks like I got a real bargain. He's nearing the end of the best season I've ever seen by a pitcher in the game. With a couple of weeks remaining in the regular season, he's an amazing 25-1 with an ERA under 2.00. And he's only 25!
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Things can always be worse.
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