of course he is a good signing for free. He is easily worth 20m for english teams (considering the fees of Baba, Chambers, Gabriel, Lovren or Blind). He is not an elite defender, but he´d improve many teams. He is better than the likes of Gabriel, Blind or Mangala. There is a good chance, that he´ll turn into Liverpool´s best CB (depending of Lovren´s future development). Don´t get me wrong; he won´t single-handedly elevate them to a different level, but solving one problem in the squad for free is still good business. Liverpool have at least 2-3 other positions, where they need to improve (DM, LB, winger; goal-keeper), so they can´t spend all their money on just one or two players.
Who would have been better than Matip, if they don´t want to pay a crazy fee?
If they sign Karius as well, they´ll improve two positions in their starting11 for 10m€ and both players can still improve. It also might allow them to spend a bit more on a DM or a winger.
When was the last time we got anyone for that kind of money, who didn´t flop? Probably Smalling and Chihca in 10/11.