I know it is hindsight from the PSG game, but even before that I have never thought he would make a good centre-back. He is a natural at performing his defensive duties, but if his lack of physicality was an issue for him to be regarded as a first-choice midfielder, then how could he possibly play centre-back? It could probably work against a team like Spurs, or Arsenal (when Giroud isn't on), but any other team in the Premier League would have their CF ruin him. It's not even to do with his height (there are many short players who have excelled at CB, see Cannavaro) - he is simply too easy to bully. He has no pace at all, and has also showed little aerial ability.
I'm not criticising Blind, but more Van Gaal. Blind is an excellent player to have - he won POTY playing as the #6 for Ajax, and his combination with Young, when he played left-back, contributed to our best run of last season. It is clear to see he is not a real centre-back, though. All that having been said, I do think that playing him at LCB will benefit us massively in the moments where we are chasing a game, with the opponents pressed back in their own half. Because of LVG's possession style (that sees the other team without the ball and penned back for most of the game), having a centre-back (and more-so in our case, a left-footed one) that can pass the ball will make a difference. I don't think it's essential, and I feel that being able to defend is the #1 priority for our CBs (as we cannot afford such luxuries against better teams), but he may improve in this position. I think he will have his uses at CB, but the idea of him being a first-choice central defender scares me a little bit.