I feel that you've set up a bit of a straw man there coblin - but I digress.
There are certain support services provided by universities which had taken a hit since VSU such as child care and counselling. I'd take this further by saying that the university 'culture' has taken a hit, according to some.
Do remember that the amenity fees didn't all go to the student unions - they also go to the university to provide non-academic services as well.
But this way, by having a voluntary system that does mean out-of-pocket expenses (in the form of a loan), those who don't want to pay don't have to and those that wish to but don't have the means to, can.
Prostitutes aren't exactly a support service, if you ask me. And I also agree that some of the things that student unions do are really, really unnecessary (e.g., kill that wom*n's room or fund a men's room).