How did AF cancel the flight? Did you call AF? Would seem extremely strange for AF to cancel a confirmed ticket. 'O' on AF is business. This will be booked as an AF flight and this is 'AF O' ... what 'VS O' means is completely irrelevant for an award ticket.
When did you encounter a problem? At the airport? As you mentioned, the AF website shows 'business class' and I can't see how this will be an issue at all.
Something is very strange here.