If you don't like the new ToS, when they switch to them and an accept/decline option comes up in the app you can feel free to decline and delete the app.
For example, I use Flickr as a free service, and I don't think they owe me anything. They could add advertising if they want, they could remove the free tier and shut down my account if I don't pay, they could shut down the service entirely, etc. That's all well within their rights, since they run the service. But imo it's a qualitative difference from those kinds of changes if they were to add new ToS terms claiming ownership or ownership-like rights over my photographs. That's very different because it can actually damage my career outside their service if I fail to notice the relevant ToS change and they grab some rights I didn't intend to license to them.
Now obviously network effects help something like this grow, but don't kid yourself. They aren't running a charity. They are running a business. At some point you have to start making money or the service just goes away. Then all that those amazing users "built" will be gone in a second when they flick the power switch.
Everyone bitched when Facebook added ads, but guess what, they keep growing and people keep using it. Shocking.
If I as a customer pay any amount (including $0.00) and agree to the terms of service, the company should honor those terms, or, at the very least, be forthcoming with how they will handle my data.
The reason people are angry is because:
a) They didn't have any inclination of how Instagram will try to monetize. I think you are giving users way too much credit in how these startups work (ask your non-tech-savvy friends how Facebook or Google make money; I guarantee you will get blank stares). The customers who joined before Facebook took over signed a completely different set of ToS. Again, there is nothing obliging them legally to grandfather these customers, but it's not a nice thing to do "Thanks for the ToS. Btw, Facebook took over, so good luck!"
b) They tried to sneak in the changes and got caught. Nobody likes to have stuff done behind their back, so a big announcement with enough lead time to switch services would be nice. I don't use Instagram anyway, but I think this applies in general in how to treat your customers.
The other thing is that a lot of people use Instagram to share photos they only want their close friends seeing, so people are more sensitive about privacy changes.