Dude, are you Instagram's lawyer? How can you be so sure?? Either way, you still don't get the point. It wasn't about whether they were going to sell it or not. It was about they giving themselves the 'right' to automatically, possibly do so in the future.
Naturally, when you do something like this, especially with others' data, you could in the least inform them. Because it's their fucking content. When I joined facebook and orkut, I saw the ads on the side. I knew it was a compromise I had to make. So it really didn't matter to me.
That's why I still use Google. Because I know the company is trying to make money by letting me use it. With Instagram, when I joined it, there were no ads nor did they tell me or give me a hint that my photos would be 'sold'. An average user would have assumed it would remain free forever, but I knew they would somehow need to make money. But, they didn't express their intent to make money (through selling your photos) clearly because they knew if they did so, no one would join their service. Hence they basically deceived you into joining their service for free initially and one fine day gave themselves the rights to sell your photos. That's unethical. The problem here is I took the effort to get the photo right, but I am NOT compensated monetarily for my effort. Instead Instagram just benefits from it. So it's like a free photo sharing site first that is automatically turned into a stock photo site without your consent where you don't even get any benefits when your photo is sold. I'm sorry, that's unacceptable and that's unethical.
What the consumer owns is none of your business - be it babies, dogs, sunset or even elephants. It's their will to do what they want with their phone's camera. And like I said, there's even nothing wrong with monetizing these photos as long as you express your intent clearly.