Answer of the Day after the jump.
No, he shouldn't have let it drop foul.
There were runners on second and third, with one out. If Kelly lets it drop, there are still runners on second and third with one out. On average, there will be roughly 1.5 runs scored in that base/out state.
After catching the ball, one runner scored and the other moved to third; on average, there will roughly 0.4 runs scored in that base/out state.
So it was 1.5 runs (on average) vs. 1.4 runs.
It's close, but whenever it's close you should do the natural baseball thing. And it's almost always close. In fact, I would advise a fielder to spurn an out on a foul ball only in an exceptionally close game that's in the late innings.