Edgerrin James: Peyton Manning Should Come Back ... 'Free Money!!'

Peyton Manning's former RB says the QB needs to COME BACK next year -- with Edgerrin James telling TMZ Sports it could pay off BIG TIME for the 39-year-old.

Edge (who retired in '09) was out in L.A. -- celebrating Reggie Bush's bday at 1 OAK -- when we asked if he thinks his old Indianapolis Colts teammate should sign a new deal.

"Why not? They payin' $50 MILLION!" James said ... "Free money!"

There are reports Manning is torn about his decision ... and still hasn't made up his mind.

Not sure if his old pal Edgerrin is gonna sway him either way ...