Hi,
On your Login Welcome Page, have a script to recognize members that have previously registered (but are now demoted), and provide them with a Modification Button to re-signup ( pay again).
For more info about Modification Buttons go here:
http://www.s2member.com/paypal-modification-cancellation-buttons-video/
For an example of a script:
Dashboard -> s2Member -> API / Scripting -> Using Advanced Conditionals
video:
http://www.s2member.com/advanced-conditionals-video/
Or, you can have s2member simply delete the member upon cancellation.
this will allow them to sign up again using the same email address.