This should be illegal. I can understand raising the rates on existing paid plans automatically, if nothing else it's eventually reasonable for inflation purposes, but auto-converting from free to paid? No.
Of course this would be a horrible rule to enforce between the "the contract changes weren't run by legal" and "that line is enforceable in this outher jurisdiction that we operate in". But scaring average consumers with a massive contract and a line at the end "even if part of this contract is unenforceable the remaining clauses apply" is just abuse of people who don't have the legal power to actually test if the claims are valid and get screwed over.
I don't think it should be illegal to have unenforceable clauses. Just ones that are known to be unenforceable. For example look at your average ISP out TV provider contract and there are a handful of these designed to prey on the public that doesn't know better.
It would definitely be difficult and messy to enforce, quite likely to messy to be feasible, but I would like to see some rule like this passed.
The only case I can see them getting money is if someone actually is using FogBugz, and is willing to pay, in which case it's fine.