Hey Lichter, when a user cancels a subscription they are automatically demoted from the S2 Member Level 1 - 4 to a subscriber on your site.
What i do on my site, is set that subscriber level to restrict it from accessing certain pages.
You can choose specific pages or type 'all' to prevent access to any pages upon login.
See the options in General Options ---> Page Access Restrictions
If a member tries to access one of these restricted pages then they are redirected to your membership options page that you should set up in the General option ---> Membership Options Page.
Here I place a link to a page I have set up to modify EXISTING accounts to reactivate the S2Member Levels through a new payment.
This means that a member can keep all of their old info and merely start paying for access again.
If you made it so that a user can't login at all after demotion then you may as well have the option to 'delet user' on demotion as they couldn't access you site regardless.
By still allowing them to login but to restrict what they can see makes more business sense as they will want to upgrade to get back their original access.
I hope this makes sense and if you need help setting this up just drop me a PM on here and I'll go through it with you.
Cheers
Ross