The Senators should do a hall of fame thing, where they can honor significant players without retiring their number.
Alfredsson should be the "first" (Yes I know about #8) to get his number retired.
HOF would be good to recognize guys like Neil and Phillips, and maybe even Spezza, Chara, Hossa, (should be Heatley but it won't happen), and Redden who were big stars that were developed and/or spent significant time with the time.
Neil was never a superstar, but to spend your entire career with a single team and play 1000 (maybe) games is a huge accomplishment.
I wouldn't be against them retiring Neil and Phillips numbers, but if it were my choice, I would only retire Alfredsson while honoring Neil and Phillips in a different way.