These cloud based services will all be massive flops in the end. Storage technology is always increasing and prices are coming down meanwhile more and more restrictions are being put on mobile broadband and things like unlimited plans are going away because mobile broadband providers can't keep up with the demand. Also from a battery perspective we all know how quickly the batteries in our mobile devices die if you're heavily using mobile broadband.
A service like this would be useful as a cloud based backup of my media, for those times when there are some songs I'd like to hear that aren't on my mobile device and battery life isn't an issue and on any device that is wired that either isn't on my local network or is but doesn't have much storage capacity on it's own. Let's face it. For most of us, it's kind of niche deal.
Now, some kind of cloud based subscription service where you pay a monthly fee and have access to a wide range of media that you don't already own is something that is useful and will be a hit if priced right with a large enough library.
Hopefully this service is step one in getting media companies on-board with the ultimate goal of subscription based streaming services of media you don't already own. That kind of service is something I would pay money for if priced right. Cloud based storage of your own media at this point in time isn't unless it's free.
I predict the iTunes Cloud will be a massive failure as most people will not want to be strictly tied to these music labels.