I heard they did this in India a while ago. I think @jeffberwick talked about it on an episode of The Anarchast.
They were going even lower denominations than that. Apparently people were holding money themselves instead of putting it in the bank. When they eliminated the bank notes people were stuck with high sums of money. They couldn't make a $70,000 deposit all the sudden without raising suspicion. There were a lot of people that lost their savings.
The government says they are trying to disrupt organized crime by making them deal with smaller notes. I think they just don't want anyone hiding their money. It's makes it too difficult to take it away.
Yeah, that's my understanding of the situation in India as well. It caused (and is still causing) lots of turmoil for tens of millions of people. And like you said, it's just to consolidate government control over the people, it has little to do with fighting crime.
Sadly this is happening all over the world. Canada, Australia, India, everybody seems to be slowly chipping away at the people's right to private currency.