The last thing the Police wanted was lots of people turning up from long distances away. They had been told that the festival would be mainly for local people - hence the relatively small size of 5,000.
When it became clear that ticket sales were slow, I bet the Police realised that the security risk was higher than they had been led to believe - hence the Police re-assessing the risks and deciding that Babyshambles was too big a risk with a predominantly non-local crowd who would be turning up mainly without tickets .....