Kathy Griffin is a dumbass. A professional troll.
And yet: Dumbasses should be allowed to speak, too, and suffer whatever consequences come. At least, that is the theory behind the free speech maximalism that Musk appears to be staking so much on.
Impersonation is cringe, it provides a justification for the suspension here, and I don't think someone can realistically expect to get away with it for long particularly when you're impersonating the damn owner of Twitter. And yet, Griffin wasn't spewing hate speech. She wasn't retweeting a severed head. She was making political points about women's rights and those sorts of things, on the eve of a major election.
By banning Griffin, Musk made her into a free speech martyr and inevitably made her trolling a bigger story than it otherwise would have been. Griffin is gone, for now, but in managing moderation issues like this without coming off as a hypocrite, Musk's problems are just getting started.