I strongly disagree. For one thing, the annual scholarship limits prevent a wholesale housecleaning and restocking. If a new coach wants to drop 25 guys, it's not like he can have a 50-kid recruiting class to fill those slots.
Second, in the cutthroat world of recruiting, what kind of message would that send to recruits or their parents? "Come to State U, and if you don't perform within a year or two, we'll throw you back out on the street. Since most other schools would rather take an 18-year-old than a 20-year-old transfer who couldn't hack it at State U, he'll be living at home and flipping burgers until he's 30 with no college degree."
If nothing else, keeping five or so junk players around (and making a big show of it) would be good for the image. A new coach standing up and saying, "I believe we have a few players who are useless in our systems, but it would be wrong to just throw them aside when they've committed so much to this wonderful school" would certainly not be detrimental.