Like I said earlier... If anything I think a "release name" system would be better. Just flag inactive characters for a rename and release the one they had.. because from what I have read ... that is the real issue people are upset about here. (The inventory issue is speculative. You have no idea if deleting other characters would equate to more space for other users, some how, I personally doubt that.)
There is just no reason to delete characters, outside of them being gil sellers. If Square starts running out of storage space on servers, maybe it will be an issue, but until then, a flag inactive for rename system would be better.