Am I getting my 2.99 back? Or is the free version ad supported? In the process of trying to get more users, the free move might alienate their paying customers
If they give it away free, then I would expect that they do something for previous purchasers. If they don't, they risk building a lot of bad will from early adopters that could kill their next venture.
Then again, one could argue that you paid that premium for early use of the app, and for $2.99 it's not worth holding a grudge and refusing to purchase their next product.