So now they are a Stock Photo site... That doesn't offer you compensation for your work. Perfect timing, since fb had that vote about copyrights last week... It's only when you break the law then suddenly you own the rights to your photos. Nice.
Say you're a famous nail blogger and you upload a pictures of your nail art on Instagram. A nail polish company rep sees it and likes the images and wants to use it to promote something, instead of going to the blogger and compensate the blogger that company can instead go to Instagram (if they're already advertising on Instagram) and just get their permission to use that image.
Similar situations have happened to numerous nail bloggers in the past where some companies have taken their images, cropped out their watermark and used it in various promotional art/ads. The most recent one that comes to mind is from this past July or August and I know that I know the ladies whose images were used without permission but off hand can't recall which ladies it was - possibly Lacquered Lover.
I think Instagram needs to revise their revision because people won't use a service if it means that Instagram can essentially sell a license to someone else to use the work and not compensate the person who uploaded the image in the first place.