(1) The effort it takes to click a mute switch is little different from that to turn over my phone (and probably less).
(2) Phones turn over accidentally. Having other effects like the ability to hear incoming calls/messages tied to that might not be universally viewed as a "great feature".
I can't help but think that if this was an iPhone feature you'd love it. It's great. It's easy to see at a glance which way up the phone is, much easier than locating and then checking the position of a small switch.
I would probably turn it off because I'm always dozing off on the couch with my phone going any which way. I'm sure some people make good use of it and there's plenty of iOS features that are irrelevant to me as well. But there are probably 100 more attractive things to me for the Galaxy S3 than this so I'm kind of stumped why they'd list 7 relatively different minor gesture ux and yet they fail to include major advantages like homescreen widgets and app integration (intents).
You can turn it off if you don't like it. I can't count how many times I've accidentally flipped the mute on or off on my iPhone just having it in my pocket.
My 1st gen iphone had a terribly flimsy volume switch that completely wore out just over a year after I got it. I don't think my 4S has ever toggled unintentionally and seems more solidly built but I haven't had it for close to a year yet. The mute switch on my old 3GS (now wife's) is also still working fine (volume up/down broke off awhile backthough).
The other thing I like about flip to mute is that it's an easier gesture to execute than toggling a switch or a two or three step mute on some other phones. I can never remember which way is off on the iPhone so I always flip the switch twice until it vibrates.
It's not a game-changing feature, but there are lots of little details like that on the S3 that make it feel like something Samsung really put a lot of thought into.
(2) Phones turn over accidentally. Having other effects like the ability to hear incoming calls/messages tied to that might not be universally viewed as a "great feature".