I think the main reason for the 1.2 changes is that under the current economy, someone who was determined to work hard enough could end up owning a significant portion of a sim for only $15 a month.
Because of the constant injection of new money into the economy (this has been discussed elsewhere) many people were able to afford 1/8 of a sim. From the 1.2 price structure this is, to Linden, a $40/month value. Yet most of those people were only paying $15 or if they had lifetime memberships even less.
The bottom line is that the general population of SL was slowly but surely getting richer, and thus able to afford more land and prims, but still paying the same amount of US$ to LL. How can they continue to bring new sims online when the average L$ per user is rising faster than the amount US$ LL is making from the users?
Clearly, I'm conjecturing a lot here. But when I joined SL 6-7 months ago there wasn't even such a thing as "prim banking". The fact that resources are scarce enough and people are rich enough to bring prim banking about is a good sign that the average L$ bank account is rising.
LL saw that the L$ economy was ALWAYS going to allow more land per person than the amount of US$ per person. They had to do something to stabilize land buying and get into a profitable (or at least not losing) business model.
Once again, this is just my opinion based on what I can see. But I think it sounds reasonable. Feel free to offer alternatives, but let's at least attempt to keep this thread as an objective discussion of LL's reasoning as opposed to a whinefest about the particular thing we don't like in the 1.2 FAQ.