For those of us in the UK that do visit Europe or wish to speak to people in Europe with Google Hangout, Skype etc. this is excellent news, as it presumably is for all Europeans.
EDIT: I speak of personal experience, I can't really talk too much about Eastern Europe people but I have met many people coming from there and I didn't hear any specific complains.
For the UK, and some countries that are not part of the accord, I do need to have a visa, and it is PITA. It usually involved going to embassy, paying some fee, providing documents, convincing the consular you are not doing anything shady, or going to overstay, or whatever. Not fun, especially if you are just trying to do a few days short visit.
Also, starting with January 1st, 2014, this will no longer be an issue.
On people abusing the system, it happens. Don't worry though, as personally I'm not in a rush of moving or working in Cyprus, especially since the bank tax ;-)
I'm an UE citizen, and nowadays moving countries is almost like moving cities (Schengen Agreement is still a little bit different than the UE).
Except for the language, of course!
Anyway, the distinction is abstract, and probably has few real world implications, but legal requirements to carry identification, or to register your official residence are among them. It is also an issue that comes up when people are confused outside the US why we have issues around voter ID laws.
Though I can't speak to the ease of relacting between EU countries as an EU citizen, I can imagine that the UK could give the impression of being more open just because you don't necessarily have to enter an imposing building with door buzzers to obtain registration which might feel like you are having to ask permission.