You are certainly entitled to have your own opinion. However flawed or wrong that opinion may be.
Speaking as someone who originally started playing this game back during Beta, and a long time subscriber, I let my account lax for a while due to a number or different reasons, which are not pertinent to this discussion. However, at several points during the last 5 years I have re-subscribed for a few months at a time to catch up on the game, to reconnect or just to fill some downtime in my life. Each time I re-subscribe, I usually take a few weeks, playing as a preferred status member, to check things out and see if I really want to spend the money to re-sub. And after a few weeks, I usually end up re-subbing for a short while. So, I can tell you from first-hand experience, that preferred status members do in fact re-subscribe and that the preferred status level does work.
Now, if I had been downgraded all the way to free-to-play once my subscription ran out, there is a very high probability that I would ave come back, played for a few days as a F2P member, gotten bored, and left. Thus there would have been no incentive for me to re-subscribe.
Case in point, Preferred Status does work.