I have the opposite opinion. When I first played Knytt Stories, I started playing around with the level editor right away, but of course that didn't cause me to stop playing the game itself. If anything it just made the whole experience of the game feel more interactive and personal. While playing the game and being amazed by what Nifflas had made, I could simultaneously be inspired about what kind of level I wanted to make. Thinking about designing levels while playing a really well made level can only lead to people making better levels themselves.
As far as this game goes, I personally was hoping that the level editor would be released during the beta so that I could get a head start on making my level (which I've been planning in my head pretty much since this game was announced) before the actual release of the game. It would be cool if soon after the release there were already people putting out good levels because they had some time to work on them before the release.
Of course, if Nifflas has more important things to work on up until the release, that's understandable. But I disagree that he should deliberately avoid releasing the editor in advance for any other reason.
With Knytt Stories, yeah I can see how that might help as this is a different kind of game. But as I've seen a bit of Knytt Underground myself I can tell you this is a different story. The biggest difference between Knytt Stories and Knytt Underground is, that KS has been made about stories, so you have little games that are on their own. It doesn't matter if you play a story then make your own level, then play another story. With KU, the main game is huge. You don't play a little bit, then go edit a level and go play some more, because if you do, you'll loose touch with the game and that'll backfire on you.
I've actually seen the same happen with Portal2. New members who now buy the game have instant access to the level editor and guess what, they're not interested in the portal 2 main game at all. They went on making levels straight away, and one person even admitted openly that he was playing the game because we told him after he was asking silly questions and now he came back with: omg, I was missing out!
So for a player who's really interested in making levels, I can understand that you want the editor as soon as possible, but looking from Nifflas' perspective, he'll make it so that people will miss the great storyline.
I suppose this is similar to games where you have single player and multiplayer, where most gamers will skip single player alltogether and go for multiplayer straight away, and much much later play single player because others say its a great story. The difference here is, that for a level to be good, its a good idea if you have played single player so you can be inspired by the single player and make better levels.