Hey Matt,
Upgrading the operating system won't cause users to be deactivated unless they're also changing other things. So, for instance, if they change the operating system and replace the harddrive, then yes they'll need to reactivate.
We're changing this behavior in TurboActivate 4.0 (so that an operating system upgrade isn't a "hard change"). Also, in the next week, we'll be changing the algorithm server-side so that customers who get deactivated because of changing the OS and replacing the harddrive, they can just re-activate using the same product key.