Well... I can't say I'm happy. I've been using my miles almost exclusively for upgrades - a good way of travelling in comfort at an affordable fare while still earning miles to keep my status. I don't think award tickets are good value, especially not on short-haul routes where KLM's taxes and charges are often more than the entire fare charged by other carriers.
But, having said that, I understand the sentiments espressed by those who will now find it easier to get upgraded as there will be less demand, and while I am disappointed at the loss of yet another perk I realise there is no point in jumping up and down about it.
Here are some ideas that FB should perhaps consider:
1) Allow those on cheap tickets to upgrade, but charge them more - this would be one way of regulating demand
2) Allow those on cheap tickets to upgrade on a standby basis - surely it must be better to relieve someone of a few thousand miles than to have to op-upgrade passengers for free
3) Enable those on the more expensive fares to upgrade at the time of booking. If I could buy an expensive Economy ticket and be guaranteed an upgrade at the time of booking I'd consider it - but if I have to buy an expensive Economy ticket with no guarantee of an upgrade I'd rather not gamble a few hundred pounds but buy a cheaper ticket instead.