The the guy who just down modded the comment, When is forcing users to leave a good idea? ... and where is your response to the question>?
Of course, that assumes you can get plenty of paying users in the first place...
There is the whole idea that they will recommend their friends who will in turn pay but the odds are if they are happy using the small portion of features you offer for free then so will the friends they recommend primarily because they can only recommend it based on the merits of said free features.
Not all customers are profitable and dropping the ones that aren't is never bad business.