That's what I would have suspected as well. Weeding out the users that are not a good fit is very interesting indeed!
I suspect too that asking for CC info straight after the demo would be less of a repellent, once the visitor has actually tried the app (and it will probably lead to less chargeback, too).
This is the real benefit of free/no signup. If you can weed out your customers that aren't a complete fit your support costs drop dramatically.
Did you run it as an A/B test to be sure that the eventual rise in people paying wasn't because of some other change that you made which you're not thinking about?
There's a 30-day period before those people have to decide to pay, so I didn't run a full A/B test during that entire period because we were clearly getting more qualified signups, so I don't perfect data on exactly how big the increase was.