That's a decision for you guys to decide, test, iterate, and come to a conclusion about your user base. I brought up the storage/hosting issue as a problem for your sustained business. Your current policy is great for users... just not you in the long run! You could try maintaining the current policy and see how many dead blogs you end up having to host. Perhaps I'm thinking there will be a lot of ghost blogs and retention/hosting will cost you guys more than it actually will.

An alternative solution to the problem would be to allow users to download their blogs as a backup from the service and reinstate them if they wish to continue using the site. The only major issue I see with this is retaining Disqus comments? Perhaps make a note that any Disqus comments on blogs will be lost in the event they stop hosting.

This also allows the user to be in complete control of their blogs, if they decide they would rather host their blogs elsewhere.

I would then retain their data (mostly for disqus comments?) for a year - maximum - and cease hosting when you guys see fit, be it immediately (most fair IMHO), or after a period of several months. I see no reason for you guys to have to host without being paid your monthly dues, but if you wish to host for 3 months or whatever period of time that's up to you guys!

Could go with Heroku type "sleeping" of blogs.