Their are several reasons that the Indians may be signing the amount of players:
1. The team was ravaged by injuries during the 2011 season and had to use the disable list a total of 22 times (second most in MLB). The injuries affected nearly every position at one point or another as only one player was able to make 90+ starts at one position (Asdrubal Cabrera).
2. Through promotion, trades, and injuries their will be plenty of openings at the AAA level should the players signed be asked to or choose to report (not all of the players signed will be required or asked to report to AAA.) The Indians will hope to stay healthy at the major league level while the minor league signings fill out the roster in AAA until the natural progression of AA players can be advanced.
3. The Indians want competition to be present for some of their younger players come Spring Training. It seems that every season the Indians have a young player full of promise who takes a major step backward leaving the club in a lurch. In 2006 it was Fernando Cabrera, in 2007 it was Jeremy Sowers, Josh Barfield, and Cliff Lee, in 2008 it was Franklin Gutierrez and Asdrubal Cabrera in 2009 it was Fausto Carmona, and in 2010 it was Luis Valbuena, and 2011 it was Matt LaPorta. Compound this list of failed young players with a few targeted injuries and you'll find a team fighting to climb above .500 on a consistent basis.
4. On December 29th, Asdrubal Cabrera played his final game in the Venezuelan Winter League. He was caught in a rundown and removed from the game. No further updates were given and the possibility remains that he suffered an injury. If Cabrera was to be slowed by an injury of some kind their would be a competition for the utility infielder spot as Jason Donald would most likely take the role of starting shortstop.
*It should be noted that there is absolutely no proof or rumor circulating that Asdrubal Cabrera suffered an injury, just that he was removed from a game and I have not been able to determine why.