Is this the first time something got pulled from Cydia because of a commercial / legal / licensing issue? It's interesting to see Cydia evolve its own processes and rules to respond to legal challenges.
Disclaimer: I haven't used Cydia for about a year. I used it extensively with my old 2G and 3G iphones.
What I saw was that Cydia (and um, the other major repo that Cydia took over, forgotten the name) was reasonably careful to not include pirated software or sexual stuff. However, there were other repos stuffed full of pirated stuff.
I didn't use the pirate repos as iTunes apps (and Cydia apps) are so ridiculously cheap and convenient, that paying is unquestionably better, especially as so much of the money goes direct to the devs. I remember when mobile software used to cost over £20 ($30) for a crappy notepad app.