It's remarkable, this sense of entitlement people have. You literally have a computer program here that can make photorealistic imagery of almost ANYTHING you ask it to, which was impossible even half a year ago, and here you are complaining that people won't use it unless it incorporates all of the protected imagery of famous artists and celebrities. Amazing.

If version 2 is worse than version then obviously a lot of people will use version 1. That doesn't make them entitled.

Is it entitled to think that a 2.0 will not have regressions on useful functionality?

yes

Loss aversion is strong in humans.

I don't think you're using the principle of charity here ("make the best interpretation of a post"). The person isn't complain, he/she is just saying that people will probably return to v1 unless v2 has something impressive to compensate.