Why couldn't he just stay at 205 and have fun fights?
Hey, he talked crap to those Brazilians. So time to pay the piper. Rashad would be a fun fight. Sonenn/Forrest is a winnable fight for him to get back to winning and a decent matchup.
I don't see why he has to retire
Because he's made it pretty clear he wants a belt, and the reality is he probably won't be as good at Light Heavyweight as he was at Middleweight, he could maybe beat Shogun or Rampage but that's about it. Not to mention unlike most fighters he has a future outside of fighting, Chael, Stann, Cruz, and Mir are the best analysts they have, so he should probably take advantage of it.