Excuse me if I go on about this, but this a topic which has been on my s*-list for ages!
I for one can definitely vouch for the penalty from Ink for declining the for-pay listing. In fact I'VE been vocally complaining about the same thing for MONTHS! The EXACT same thing happened to us. We were in the #1 position of Ink for years, shoot, we've been around longer than Ink. Then when they switched and asked us to pay we declined, figuring we were already highly listed we should stay SOMEWHERE in the index (they wouldn't actually REMOVE listings because they didn't pay would they?). We TOTALLY vanished from the listings within 2 months, even though our site is in the top 10-20 on every other search engine. We finally decided in May 2003 it might be worth the bucks just to get back in and registered through NetSol one of their resellers (because we weren't rich enough to spend $5000 month or whatever and actually get to talk to one of THEIR own customer service reps.)
We got re-indexed alright, but we can STILL to this day, only be found by typing in our actual URL or .com domain name! And I'm talking "non-keyword-domain-name.com", not even "non-keyword-domain-name" I don't even think this fits the definition of indexing, since if someone already KNOWS our URL what would be the use of searching for it!
I just now searched for the entire first sentence, in quotes, from their own listed description (obtained when I search on the domain name) and could not find our page in the top 100. I can sometimes get it to come up on the first page of results if I search on an entire paragraph from the page quoted. It's like it has a PR-100. 4 hits (3 my own, and 1 from someone grossly misspelling an obscure word that happens to be on the page) in one week from Ink, for an otherwise 12,000 visitor a week site (from the other search engines) is not even worth the submission fee!
We have never, in the domain's history, practiced SE spam tactics (there was no need to when we started) and never done anything to get us penalized anywhere else.
Ink of course won't even TALK to us, since we don't spend $5000+/ month. NetSol, who we bought the submission through doesn't even pretend to have a clue about penalties and only checks to see that you have indeed been accepted according to their database, before insisted in writing that there are no penalties whatsoever, and of course "guarantee only indexing, not position... yada, yada"
I have already written NetSol and told them we will never renew. and will probably be tranferring our 50+ domains to another registrar.