I think the interesting question here is "how many folks will simply ignore all of this and keep on using Instagram?" -- if privacy scandals were going to hurt user bases, Facebook would long since be gone. I suspect that any loss of users Instagram has suffered are more likely to have been through the dumbing-down of their iOS app than privacy concerns.
I will continue to use Instagram, as I don't feel particularly concerned with my photos on there. I'd even feel honored if they were a bit smarter about their approach and planned on asking for permission to use specific photos first. Shit, that would probably have kept this from being a PR disaster and instead become a bonus for some users, as I think it would be really cool to see my photos featured in different mediums.
Good points -- although I suspect that the reason they don't ask permission is they want to be able to transparently do the kinds of things they've been doing with profile pics for years ("your friends love X, click here").
