The new low end usergroup was created to combat two things; scammers and spammers.
Most of the account restrictions are to prevent spammers from posting links, mass messaging members and overall to restrict the amount of spam damage they can do.
Upgrading to the "Epic Member" level, which requires a Paypal account and phone number, helps to combat scammers since they have to go through at least some verification process, so while it's not as thorough as being "Epic Verified" it is still much safer than having nothing.
Other restrictions, like no avatar and profile image, are meant to provide incentive to upgrade. The whole point of the system is to get the vast majority of members to have some form of verification to create a safer environment to buy, sell and trade. However phone verification is not free so I need to cover my fees by adding a fee to upgrade. This is also a business, so yes making additional money is also a goal.
As for old members, I have already provided a free upgrade for anyone that registered 6 months prior to the new system and had at least 5 feedbacks. Bypassing the Paypal and phone verification means I need to be sure the member is legit. Any feedback less that 5 is too low and I would not feel comfortable upgrading them.