
Gamasutra wanted to know too and went and asked the right guys. Director of communications Adam Mersky confirms money will buy access to stuff but says it won't buy you XP:
"We wanted to make it so that the guy with the biggest wallet doesn’t have an unfair advantage," says Mersky. "All the best loot is still in the game, and the hardcore can play their way from level one to 20 totally free."
And then he says it wasn't because the business was doing poorly:
Such a transition lends itself to speculation that perhaps the game was not continuing to succeed on a subscription model, but Mersky says that’s not the case. "If that were the case, we wouldn’t have kept rolling out two, three, four updates a year. We were doing fine as a business."
They discuss more things but that's what you'll need to read at
Gamasutra.