I'm surprised so many of you are upset by this. I use a paid email for the custom domain (not gmail) but I feel like they're requesting a pretty reasonable fee after such a long time of free usage.
You're right the fee is not unreasonable for the services offered, especially compared to the competition. But given it's not really what many were actually after (we just wanted a @example.com gmail account!) and are left with a handicapped account, why would we want to pay up?