I agree that it can get cluttered, but the service/line indicator is the second most important information one needs before entering a station. Especially in a city like New York, with subway entrances sometimes being on every corner, the service indicator lets you know you're going down the right stairs. I know we have far less stations in Toronto, but still the indicator reassures riders that they're entering the right building.
Also, indicating the mode (subway, light rail) isn't enough. For most people, it's irrelevant what specific technology is provided in the station. They want to know where they're going; what destinations this station has to offer. So displaying a light-rail symbol doesn't do the job. They should just display the Line 5 icon, and in the future... the Line 3 icon.