I think he should still fight Cotto. Just because Cotto lost doesn't mean he's no longer a top fighter. Should they fight, Oscar is still fighting a big, marketable name and a Cotto victory should help him get his confidence back.
Sure, Cotto's loss doesn't mean he's completely done (is he?) but I somehow think Pac is more marketable than Cotto and will definitely give a bigger paycheck for ODLH and Pac.