They've been using this kind of pictures in NZ as well (but the brand names are still there).
Maybe it's a bit like those road safety adverts on TV that we get. Some of them are quite upsetting (at least for me), but then I think, if it's going to prevent drink-driving/improve road safety, then that's good. I'll just look the other way or something.
And I guess if pictures like that on cigarette packs are going to prevent people from smoking, then I'd say that's good too.
On the other hand, cigarettes are not illegal, so I can understand that there are arguments against interfering with companies' packaging/branding, or with people's choice to smoke (as long as they don't put other people's health in danger)...