The new terms, found here, also allows them to escape liability of any damages caused to you through the service by malfunction. For example if all your private images become public, at whatever personal cost to you, you can’t sue. There’s also no mention of whether they are still able to sell your images and such if you were to delete your account after they’re implemented on the 16th of January.
You might not think anything of it, especially if the majority of your photos are what you had for breakfast. However, it still stands that there is a lot of talent on Instagram, not to mention the idea that your username and likeness could be sold without you knowing, not just any images of yours. There’s also the possibility that these things could be used to promote something completely against your morals. You simply don’t have a say.
Even if you don’t necessarily agree with my take on it, I urge you to read through both new policies and form your own opinion. However, more than that, I urge you to close your accounts and join those who are already making a stand. Move to other services, like Picasa or Flickr. If enough people leave and kick up a fuss, it might even force them to change it-worked against Yahoo when they tried similar policies with GeoCities.
Edit: Wired have posted up tips on how to easily download your photos from Instagram.