Ashley, there's only one problem I see here, but it seems like a major one.
Someone using it for free gets unlimited updates, but nag screens
someone who pays for subscription basically gets a frozen version, so after 2 years, the free one is actually better.
Oh, you're right... the subscription expiring has to revert back to demo mode, then. Good catch... it means users who have paid end up getting nagged again, but the message can be changed if the license has expired, and made less intrusive.
Also another question pops up, you say that you and your team did this because you like programming, well why don't you want to keep it free.?
Because I graduate soon, and I need to get a job, and I can't think of a better job than working on this, but to do that I need a way to pay rent, food, bills etc. I could get a job, and it would be tech related because that's what I'm best at, but there's nothing worse than doing a 9 till 5 on a computer then coming home to carry on working on a computer. There's just no time for anything else. This has in fact been responsible for some lengthy gaps between updates in 0.x. Plus, if we're going full time, we can make a much better, more capable program.
Mozilla are a large organisation with many employees, several income streams from parent companies and advertising or search engine deals, and I'm a guy in a bedroom who sometimes writes some code. Don't take this the wrong way, but you kind of sound a bit like "hey, this guy loves programming, so why can't he just do it because he loves it then I get to have a free program as well?" It doesn't work quite like that... I suppose you want painters to work a 9-to-5 in a call center so you can have their paintings for free, just because they love painting so much? What if they could make a living from painting instead?