I'm really interested to see where this case goes. I'm not sure I know where I stand on it. I lean towards saying that they should be able to replant 2nd generation seeds, since that more matches with previous precedent. (Sort of a "fair use" policy for seeds, where you can replant seeds on your own property but not sell them to others.) At the same time, that would really hurt Monsanto's (or anyone else's) incentive to create products.
Regardless of this ruling, I think you're going to see that in the long term, there will be something of an open source genetic engineering movement that makes a lot of this largely irrelevant. As genetic modification becomes easier, you'll see the equivalent of a GMO linux, where non-profit foundations create collections of seed that they then make available to farmers worldwide for lower cost.