Fantastic article +CNET
. I think 1 of 2 things happened:
* InstaBook thought: "We'll push the ToS ridiculously far. If no one complains, we can make money. If they do, we'll back down, say it was a 'mistake', and look like we care about the community"
* It really was a mistake. Legalese gone crazy, implying something that wasn't intended.
Either way, every single person who uses the service needs to question them. As has been rightly pointed out, the fact that Instagram themselves said they were confused validates the intense questioning.