Use any of the following 4 plugins:

1. usertype
2. Profile Manager
3. Forms and Related (specifically Flexprofile)
4. WebGalli's premium users 

Nikolas, This can be done as a plugin, its very easy. Get all the users and select the particular users, you want to change to subtype and assiign them the metadatas.

Never edit the core. You can use any of the plugins trajan mentioned for this. (http://community.elgg.org/pg/plugins/webgalli/read/385045/featuredpremium-members)

Regards, Team Webgalli

Thanks guys. I know changing the core isn't optimal at all but i am way past that point in my implementation :)  As i said the $entity->subtype="BLAH" doesn't do anything after a user is already registered /created on the system.

Already using profile manager but that doesn't really help with User types...will take a look at your plugin team Webgalli. Thank you both for your input

Nikolas, you can add that metadata to already registered users by developing a custom module.

Yeah that's what i am using a custom module ...

What i do is get an array with the users i want (let's call it $members then i do a foreach ($members as $member) and then i try to do $member->subtype="BLAH" inside the loop. This results to nothing. I can do other stuff in that loop fine eg. echo $member->name or set other metadata like $member->favcolour=blue.  the only thing i can't touch is the subtype :/ Also took a look at your plugin team webgalli but since it's hashed it isn't of much help other than it's default operation which is probably v useful to some people.

In the past at any rate, entity subtypes could not be updated after the entity is created. I'm not aware of this restriction changing.

I've done several sites with multiple user types for clients and always use a metadata value (usually "user_profile_category") because my clients always want to allow admins to change the user type.

Nicolas, why do you want to change subtype? just assign metadata as you already done with favcolour.

Yeah Kevin that was my understanding as well I just thought to ask if someone had a workaround. The metadata value is what i use right now  I just wanted to use the subtype so i could utilize  list_entities and not  list_entities_from_metadata which sometimes works strangely for me ;)

-Edit: Ok from ytour answers it seems i shouldn't really bother with the subtype :) thank you very much all for the quick responses

I'm solving this with a SQL query:

$dbprefix = elgg_get_config('dbprefix');
$subtype_id = add_subtype('object', 'desired_subtype');
update_data("UPDATE {$dbprefix}entities
    set subtype='$subtype_id' WHERE guid=$entity->guid");

// If memcache is available then delete this entry from the cache static $newentity_cache;
if ((!$newentity_cache) && (is_memcache_available())) {
    $newentity_cache = new ElggMemcache('new_entity_cache');
}
if ($newentity_cache) {
    $newentity_cache->delete($guid);
}

Maybe is helpful for somebody.