The terms of service said they could come and take it, and Steve's not paying them any money for exclusive use of the name, so from that standpoint I don't feel he has a right to use the username any more than the Boston Celtics do. It's Twitter - who owns the service - that I think has the right to do what they please.
I'm not saying that I agree with how they handled it and I can see why Steve is pissed off, but I don't think they have any obligation to let Steve keep the username.