LJ is almost certainly taking this step as a way to gather demographic information for advertising purposes.
For more information about the change, see Synecdochic's post here (on DreamWidth).
If you'd like to make your opinion known to LJ, you can fill out the feedback form here. (Please be polite; insults don't help, and as Synecdochic points out, the people who read and pass along feedback are not the ones making the crappy decisions.) Here's what I said in my feedback:
I am dismayed to see that LiveJournal is eliminating account holders' option to list their gender as "unspecified"; from now on everyone must select either male or female.
This bothers me for two reasons. First, not everyone identifies as male or female. Requiring a binary choice erases the identities of genderqueer and androgynous people, and that hurts them. This retrograde step makes LiveJournal less of a safe space for people whose identities are often under threat.
Second, everyone should have the right not to reveal their gender online. And even though the code change allows one's gender to be hidden from public view, people are still being forced to specify to LiveJournal itself. The *only* reason I can think of for LJ to do that is that LJ wants additional demographic information for its advertisers. Once again, LJ is choosing to value advertisers over subscribers.
I've been a paid LJ member since 2003; I've stuck with LJ through a lot of changes that I haven't always liked very much. But if LJ starts forcing people to (a) choose a binary gender, and (b) reveal it for the sake of LJ's demographic statistics, I will not be inclined to renew my paid account.
Please allow account holders to keep their gender unspecified.
This code change is likely to go through very soon, so LJ needs to hear from a lot of us, fast.
ETA: LJ is