The 'commercial' part is going to come back to haunt them. The rules for commercial use are so different than for non-commercial use. They will shut down the commercial aspect the first time one of the following happens:
1) A user takes a picture of a person who did not consent to commercial use of their likeness. (something that is not needed for the original individual to post for non-commercial use)
2) A photographer gives an individual a photograph without license for commercial use and that someone posts the photograph with consent for non-commercial purposes and it's used a third-party for commercial purposes.
In each of the above cases the up-loader was within their rights and the commercial publisher can't get an appropriate license because the up-loader didn't have the appropriate permissions.
The commercial publisher is going to be the target of the law suits and they won't be able to use the defense of any license because the up-loader didn't have the appropriate license to transfer. They can try and sue Instagram to recover damages and Instagram may try to sue the original up-loader, but I can't see that getting very far. (not for lack of trying as much as for lack of money and original usage not violating the usage.
Examples of case one.. I was in Story Land a few years back, and this young woman had a frown on her face, I can only image she wanted to be somewhere else.. anyway, I took a picture of her on one of the rides with this huge frown and arms folded across her chest. (not that anyone would want to use her photo as a advertisement for the story land, but I think it falls under editorial if not artistic use... but I have no right to use her image for commercial purposes, so can't give that right to anyone else)
Example for case two, both of my kids school pictures included a small sized digital image which was explicitly licensed for non-commercial usage. So I was within my rights to use it non-commercial. posting it so relatives could see them. ( as I didn't get a commercial right I can't transfer one)
Even if I used Instagram (which I don't), even if I am agreeing that by uploading an image I transfer all rights, I can't transfer what I don't own. Commercial publisher sues, Instagram, Instagram sues me .... I doubt it, and the Commercial Publisher has no relationship with me, so they can't sue me. Even if I was sued, I can't believe any judge would find against me as I didn't attempt any commercial usage and even if they did.... They would likely spend more on the legals fees than they would ever see from me.
I would normally say, no 'legit' commercial publisher is going to purchase and use a photograph for commercial use without a firm release signed, etc.... but there this case not that long ago.. and many similar ones since then....
http://www.flickr.com/groups/central/discuss/72157600541608353/