AFAIK the developer took it down because he was receiving death threats and other such abuse for using old-school Nintendo assets.
Not from Nintendo, just rabid fanboyism:
http://www.escapistmagazine.com/forums/read/7.841885-Update-Flappy-Bird-Creator-Is-Removing-The-Game-From-Stores?page=1The general logic is of consequentialism: "It's violation of copyright, therefore wrong. If you disagree with the law, you are wrong." We cannot blame corporations for this one; people willingly follow along with this. Budding indie developers use other game's assets often, as they typically do not have access to competent artists to assist them; however, it's important to note that there is no problem with these games using these assets,
until they become successful; i.e., only when money is involved. Naturally, people don't actually care about upholding the law--they break it several times a day, and I can guarantee the majority of people screaming law violation have themselves illegally listened to a copyrighted song on YouTube without paying, if not having downloaded them in any other format--for they are given no incentive from Nintendo to attack this developer; rather, the incentive, as is always the case with the successful vs. the unsuccessful, is in the unsuccessful's hatred toward success, as it kills their excuse as to why they are so, and will willingly drag down anyone who is successful in any way possible: in this case, pathetically, with a beginner's game which happened to find its way to the #1 spot on the mobile platform.
The developer could easily, by now, replace the graphics with something else--spriting is not a complicated art by any means--but this does not change the chilling effect that copyright has on people trying to get into any creative field, and the actions taken against Nguyen by his fellow man will serve to discourage others to take up game development, which is the very point. Another case of our self-defeating society favoring victimless crimes at our own detriment.