Such a policy would be incredibly stupid. One of the main things that draw me back to games like WoW is continuing playing my existing characters when a new expansion is launched. Personally, I play from when the expansion is launched to the last patch (which was over 6 months ago now, wasn't it? Man, get WoD ready for launch already).
If they decided to delete my characters when I go inactive between expansions then I simply wouldn't return, and I expect neither would huge amounts of other people who wouldn't be willing to pay a subscription fee just to maintain their characters for the better part of a year while they're not playing the game.