I'm gen 1, I am under level 25. I pay upkeep, all my friends are under 25 and gen 1s, they all pay upkeep.
Last night there was 1 server at max cap, and it was 120pop. There were less than 400 other people playing this game across another 16 servers. I don't know how you think those are good numbers, maybe relative to the people playing multiplayer mindsweeper. Right after the sale, I saw 5-6 200 pop servers topped out in the Vanilla game, and 2-3 in crpg(120pop). Those are the new players this game needs, and this ridiculous upkeep system will keep them out. It's already hard enough to play this game long enough to be able to do dmg to a level 30. You can't slow them down anymore.
The upkeep isn't ridiculous. My first generation I was able to buy over 60,000 (*EDIT* actually was around 50-55k) gold worth of gear, and still had enough left over to be a heavy lance riding a courser by the time I retired (I had to go footman a lot to pay for the bills). Your first gen is very difficult, but when you retire at level 31 you can sell your loompoint for 600,000 gold or more (and still buy a +1 heirloomed item for less than 500k), make 100k profit and you don't have to worry about money much any more.
Considering the upkeep system has been in place for over a year, if it wasn't here, then you'd have people running around in the heaviest armor, and on the most expensive horses 24/7. And then you'd have people in here bitching that there needs to be a way to limit what armor and equipment people can use.
It's a balancing act, and as a 1st generation player, you are a peasant who is a support class there to make money. By the time you're level 27 or 28 or 29 you should have enough equipment to play as a decently equipped footman.
In reality it doesn't take more than maybe 2 or 3 nights of playing to get to level 30.
And for the record, before the steam sale on warband, c-rpg was easily the most played multiplayer mod for warband, it far exceeded the people playing in the native mp servers. A lot of c-rpg players are now playing mount and musket napoleon bullshit, so that's why it's not as populated. A week ago the NA1 battle and NA2 siege server at peak times had 200 people playing (and the other NA c-rpg servers had anywhere from 20-60 people playing in them as well). The EU servers were always full during peak times as well. So that's 400-600 people playing during peak times. The community is pretty damn good (number's wise) for warband.