It really depends on your goals. Yes, it has the potential to stretch available space on smaller-capacity iOS devices (but then again, some day 64gb will be considered small). For some people, this will be the only practical benefit. A fair number of them may not realize that it's happening, since it'll be going on quietly in the background.
However, I've been waiting for some years to have a cloud-based photo library integrated with the Apple ecosystem. The iPhoto/Aperture library is not intended for concurrent-access usage across a network (LAN or internet). If you need to edit from same library on both desktop and laptop, you have some work to do to manage the process, and you don't have access to the complete library at all on iOS.
This change will allow me to work with photos the same way I work with documents in the cloud - I work on whichever of my computing devices is handy (or at iCloud.com if they're not handy), and I can pick up where I left off on any of my other devices, without having to worry about versioning.
It also will also give me automated, nearly-real-time off-site archiving/backup. If your photo library is particularly valuable to you, paying Apple (or anyone else, for that matter) for cloud storage may not seem all that expensive.
No matter how much memory you have on your computing devices, at some point it's necessary to either clean house or pay to expand storage. That reality doesn't change, whether whether you're using a hard drive, flash memory, or the cloud.
