Aqua: It is a fairly well established legal principal that a Realtor who is the "procuring cause" of a successful transaction is entitled to commission when the sale is completed. The exact definition of "procuring cause" is subject to a great deal of litigation between sellers and brokers, but in this case, if your Realtor's marketing efforts are responsible for your introduction to the prospective buyer (who has made the short sale offer), it is likely that your Realtor would be recognized as the procuring cause. If this is the case, your decision to extend or not to extend the listing agreement is probably not all that important - you're probably on the hook to your Realtor for his/her commission, assuming that the pending short sale offer is accepted, and the transaction goes through.
Keep in mind that if your listing agreement with the Broker/Realtor is the typical "Exclusive Right of Sale Listing Contract", that you have given your Realtor the exclusive right to sell your home, and therefore even if you found the prospective buyer on your own, you may well be responsible for paying a commission to the listing Broker/Realtor.
Courts will protect the efforts of a Realtor to assist you in selling your property. If a Realtor should have the misfortune of an expiring listing agreement while a transaction is pending, their commission will be protected by the law. Unless you have some serious concerns about the efforts that your listing Realtor has made on your behalf, I would recommend that you renew your listing agreement.
However, if you wanted to, you could certainly amend the agreement in such a way that it would only relate to the existing offer, and would not allow the brokerage to continue marketing your property to other prospective buyers who have yet to be introduced to your property. In other words, "you can continue to represent me with respect to people who have already seen my home, but I don't want you showing it to anyone else from here on out". If that's what you're looking for, I would strongly recommend that you seek the assistance of a qualified real estate attorney, who can draft the appropriate addendum to your listing agreement in such a way that your wishes are respected.
Hope this helps and best of luck with that short sale!