Watts, who is out of contract at the end of the season, is waiting until a clear picture of the club's direction emerges before he makes a decision as to whether he wants to stay.
Craig left no one in any doubt of his opinion of Watts but is respectful of the player's right to take his time.
"I see him as a really important player for the Melbourne footy club. I've really enjoyed the way he has played. He has got great flexibility," Craig said.
"I see Jack Watts as a critical player for our club to keep and I think he can have a very successful and enjoyable career at the Melbourne footy club."
Watts appeared on The Footy Show on the Nine Network on Thursday night and was less than convincing about his desire to stay in Melbourne beyond 2013. However Craig said he did not get too uptight about that sort of analysis.
"I wouldn't have thought Jack would have taken a position where he wanted to be convincing to stay or go because he probably doesn't know, so I don't know how he could be convincing either way," Craig said.
He said it was Watts' right to make a decision that was in his best interests and it was Melbourne's responsibility to do everything it could to impress him enough to keep him.
"[We have to] create an environment where they feel that as players they can be the best player they can be, as well as have a degree of team success. That is our responsibility to do that," Craig said.
Melbourne faces a tough battle on Sunday against Fremantle, which is shaping as a certain top-four team.
The most recent time the two teams met at the MCG was in round 13, 2011 when Melbourne won by 89 points.
Since then, Fremantle has won 32 of 52 games while the Demons have won just nine from 51. The Dockers are on their second coach; Neil Craig is the club's fourth coach since that game.
It demonstrates that Melbourne can push up the ladder relatively quickly if it makes good decisions from this point on.
Craig admitted the club would seek a midfielder in this year's draft as it needed depth in that area. The club is likely to finish second-bottom and receive the No.2 pick.
He has been impressed with Jack Viney and said an interrupted pre-season had slowed Jimmy Toumpas this season, but last year's No.4 pick had all the mental and physical tools to be a quality AFL player.
"Sometimes his greatest strength can be his weakness," said Craig. "He [Toumpas] wants to be a champ yesterday and that rarely happens, if ever, but I would sooner be dealing with that attitude than the opposite end of the continuum."
Craig was also asked whether Melbourne had been given any further information about where it stood in relation to its connection with Stephen Dank in the pre-season following AFL charges being laid against Essendon this week.
Melbourne was caught up in the drugs in sport saga when the ABC's 7.30 Report aired a report in April that linked the Demons to Dank, a central figure in the Essendon investigation.
The report alleged that co-captain Jack Trengove may have been directed to use AOD-9604 as part of his treatment for a foot injury.
Craig said no further contact had been made in relation to Melbourne and he suspected the Essendon drama would need to be dealt with before the Demons were contacted.
He said Trengove was comfortable with where things sat and that his form had been consistent this season, despite the interrupted pre-season.
"Jack [Trengove] has had some counselling on it and he has had a lot of information on it so he seems really relaxed to the best he can be with that," Craig said.
