But what Valve is doing is an improvement over the status quo, and social games are a regression from the status quo. TF2, by and large, didn't get worse by letting more people play it for less money - lots of value was created, and Valve is content to only capture a small* amount that came along for the ride.

*Many games that have gone F2P (in a generally benign way) report increasing revenues, e.g., Lord of the Rings Online, D&D Online, etc.