So in summary Flickr is giving free users hosting for 1000 photos of unlimited quality vs. 1TB of free storage to refocus on photography vs. data mining for advertising. Makes sense to me.
And as the saying goes in creative industries: you can't eat "exposure." The only way to make money is the charge money, and it's generally worth it even if it means pissing off people who expect stuff for free.
Heck I bet this change will drive up awareness of Flickr. I can't even remember what I have there, but now I'm going to look up my creds and log in to find out.