As someone mentioned, it was good for the Air Force, since they now had control over launching their own payloads and launch vehicle budget, allowing them to focus on what they needed to perform their mission without having to put on the dog and pony show for congress that NASA has to do with their highly visible manned program.
But it was bad for NASA, definitely. It removed a huge customer from NASA's launch manifests, and eliminated a key mission from STS, and amounted to a no-confidence vote from the Department of Defense.
It also resulted in the shutdown of the Vandenberg shuttle launch facility, which was only months away from launching the first-ever manned polar orbit missions. While this would've been used mainly for Air Force missions, it would've had NASA logos all over it and would've been a big step in the STS program.
The fact that billions of dollars were spent on it and it was essentially ready to go when the USAF killed it and cut their losses shows how badly the USAF wanted to get away from relying on NASA/STS.