Twitter does this as well and that's how I got my current username. There are a couple of things that are required before you could reclaim a handle (I forget the exact timespans, but it was close to this):
* Has not logged in for one year
* Has not tweeted in a year and half
* Does not any have applications linked to Twitter
If Instagram has a similar policy, I really don't have any sympathy that the username was taken.