I would find not having defined benefits extremely uncomfortable.

Saying that you have unlimited paid leave when that is obviously untrue and leaves the policy open for abuse by both employee and employer. I'm sure the example stating that less leave was taken when it was "unlimited" was because people understood that there were limits but didn't know what the limit was and didn't want to trigger management. Once things are defined, of course people will think that it's ok to take the maximum leave allowed.