Instapaper exists since 2007 and has a trademark on the name filed in August 2010: http://tmsearch.uspto.gov/bin/showfield?f=doc&state=4808:v4h...

Instagram has their trademark since September 2011 (http://tmsearch.uspto.gov/bin/showfield?f=doc&state=4808:v4h...).

So no, Instapaper is not "lucky" to still be in the App Store.

Don't assume that because Instagram is well-known that they have more seniority and the rights and abilities to do whatever they want.