Meredith and Cristina lie about their relationships to each other. Meredith says she's over Derek, Cristina says she's living with Dr. Burke. Both are sketchy on the details and clearly in denial. In particular, Cristina seems unable to express herself as she is continually blindsided by emotions. It's simultaneously painful and funny to watch. Derek seems sincere when he says he wants to work it out with Addison, but he's clearly hung up on Meredith. In his mind, when he suggests being just friends with her, be probably believes that is his intention -- although the way he looks at her suggests otherwise. 

Derek: "I was being nice to her."
Cristina: "Okay."
Derek: "I can be nice to her without being..."
Cristina: "McDreamy, I know."
Derek: "I really can."
Cristina: "Okay."
Derek: "Okay then."