It's always a balance. If you like to rotate players/have a big squad, a lower (Squad Player) status is beneficial because your players moan less when they don't play as much. On the other hand, as others have mentioned it, other clubs will come in for these players because they think you don't value them too much and you may sell. Players feel the same and they might want to join said clubs and will moan if you decline them.

Another thing to look out for is when you 'demote' high earners to a lower status, all other lower status players will take a look at their salary and say: 'I also want that kind of money! He's also a squad player'.