For the straightforward example I gave there would be a backlash, especially for the bigger names. But that doesn't mean it's a stable situation, or that other examples wouldn't escape outrage in a different context - "This video can only be played if you enable Location Permission so that we can verify you are in the correct region."
The goal when designing an interface should be to get it right, not to make something that works for now but will just have to be patched up again later. For many permissions, it would be advantageous for the user to not even outright deny, but to return a subset or otherwise modified data - only one contact group, fixed location data, filtered Internet, etc. This of course sounds like heresy to app developers, and that's exactly the point - it's the user's device.
If the only goal was to preserve privacy in 2014, then you would be correct. However, the actual goal is to preserve privacy in the future, so the current state is not the final word. Instead, we must use our intelligence to predict what can happen in the future, so that we may preempt those problems before they become widespread.
The goal when designing an interface should be to get it right, not to make something that works for now but will just have to be patched up again later. For many permissions, it would be advantageous for the user to not even outright deny, but to return a subset or otherwise modified data - only one contact group, fixed location data, filtered Internet, etc. This of course sounds like heresy to app developers, and that's exactly the point - it's the user's device.