Maths
I'm going to have a stab at correcting your maths here, which, of course, means I'lm going to smugly point out your mistakes while producing far more of my own mistakes, hence AC :)
"5 billion pics at say 1/5mb each
=2.5 bil megs"
Do you mean one fifth of a MB each, in which case it's 1 billion MB, or half a MB each - although that still seems pretty low to me...
"2.5 bil megs
=25000 x million megs"
Surely 2,500 million megs? (Assuming we're talking about American billions, which, alas, we probably are)
"25,000,000 x thousanmegs (a tera)"
From the above, '2,500,000 x thousand megs', which is not a 'tera', it's a 'giga'
So - from your original assumption, I make that 2,500TB. Still a lot to backup, I guess, but I'd say it's more accurate to just think of it as 'double the capacity they currently have', in which case it seems much more realistic. No?