Setup | Data Management | State and Country Picklists
Click on 'Configure States and Countries'
Find the Country you want to change visibility of States
Click on the Visible check box (for all states of that country or selected states if you want to remove from the picklist only some states). Any data entered so far will not be lost.
If states are established and (in)visible, then even the SFDC API enforces that you enter a valid state code. Disappointingly, State and country picklists aren't available in salesforce1 at least as of v29.
The 'Disable state and country picklists' is essentially reverting SFDC back to out-of-box 'state' wherein country and state fields are strings, not picklists. The various warnings above are saying that filters etc that are picklists for country and state will be eliminated as you are changing the data type for these fields. If you disable the whole feature and reenable the feature, the filter options become available again but they won't suddenly re-appear on reports/views where they existed before you disabled. Similar remark about merge fields, field updates, VF pages. I proved this to myself on one of my test orgs. Thus, if you went to a lot of trouble adding filters to reports, you would have to do it again.