This also applies to customer service. Nice customers get fast response times. Toxic entitled customers (especially of the free plan) wait 2-3+ days before getting a response.
I'm not disagreeing with your point, but I love it when I get great customer support as a free/low value customer, and it definitely increases my chances of conversion.
Maybe op was referring to free customers that are rude, and impose big costs to you (way above the average support ticket).
But agreed, if I get bad support as a free customer, how can I know that the support will get any better if I start paying (except for services that sell support).
When I get an instant response to a question from a friendly support, I would say that I'm far more likely to upgrade to their paid server.