He's wavering a bit on whether or how he's going to provide former Weblogs.com users with dumps of their content (which is now inaccessible) and there's a polite uproar balancing hosted users' anger with the fear that he'll pull, well, a Dave Winer and just not make the content available at all. Doc Searls' blog is still mysteriously available there and talks a bit about the situation; my reading of it is that at some point the Userland migration went past a point of no return, and failed, and Winer decided to not bother to rescue it.
This raises a few business considerations for LiveJournal:
Can we get those users over here? True, Weblogs.com was free, but I bet LiveJournal is sufficiently free even at the paid-account level to attract the users who don't want to have to worry about setting up their own hosting and blog software. I never used Weblogs.com so I'm not sure what they offered, but it might be an opportunity to see about helping users migrate this way. Specifically, LiveJournal might have a hard time differentiating itself from the basket they left their previous eggs in, which leads to:
Does LiveJournal have an exit plan? Not that I think it's going anywhere, or anything, and acknowledging that the social contract at least implies goodwill, it might be good to explicitly talk about that sort of contingency—both mentioning current backup features and talking about what LiveJournal would at least aim for if circumstances arose such that the site could not continue.
Fear in the existing userbase might need a bit of work once the Weblogs.com story gets some more press (read: hits Slashdot), too; I suspect a lot of users here will see themselves in a scenario equivalent to the Weblogs.com users who found themselves blogless with no advance notice.
I'm not sure if LiveJournal wants to target anything so narrowly, but it seems like a decent and well-established customer base (and a lot of "serious" blogs, which might help LiveJournal's teenage-angst reputation) is there for the picking.