Please correct me if I'm wrong, but my impression is that it's not just that you don't see ads; it's also that others don't see ads on your photos. The latter can be an important feature for those who use Flickr to create professional portfolios.
The original pro account removed ads while browsing the site, Not from your pages as viewed by others. Plus a lot of the time your Photos are submitted to groups, would adds be removed every time one of your pictures turned up on the page?
Pretty sure it is not a business feature to show a clean page but a viewer option for distraction free viewing.
Anecdotally, I think it is the case that if you're a Pro user, and someone else is viewing your photostream, then they won't see ads next to your photo. This probably doesn't apply to your photos in other groups, etc. So we both may be right.
But surely they don't make $49 per user per year on ads? It looks like they're over-charging on the paid accounts to cover the costs of the free accounts. Especially the 1TB is free, 2TB is $500 deal.
And it seems that after proving people will happily pay for premium features, they've now sent an email to all their customers which essentially says unless you have over 1TB of photos with us (which is pretty-much no-one), you may as well cancel and use the free account instead.
It seems like a very bizarre structure to me and I can't see people subscribing to it which is a shame as IMHO they've just vastly improved what was already by far the best product in its market.