iCloud to compete with Spotify?
I think that Apple "needs" to release a streaming service, sooner or later. I hope that iCloud will be their stream service. Here in europe Spotify is quite huge. They are planning on a US release later this year it seems like. If Apple doesn't prepare for such a release i think that they will se their market share shrink.
As for Grooveshark it's not that big threat to Apple, as the service is built today. For example they do not have a iOS app, and they do not offer a offline mode. Spotify for example has all these features. I think that Apple will need to do anything just as good as Spotify, or better to stand in the upcoming competition.
As for the price for Spotify it's relatively low, just around $10 per month, with unlimited streamed music, and the possibility to use on a iOS device.
So i think (and hope so) that iCloud will be something similar to Spotify, priced at about the same range.
I don't think it will be just like Google music or Amazon "Cloud player". You will be able to stream you music directly, without any need to have purchased the music before.