You have to ask yourselves, what is the reason for this? They are not a charity. They are not philanthropists. They are not doing this out of the goodness of their hearts. They are doing it because there is *clearly* a lot of money in it.
If they have their way.
They are not doing this to make money from selling the hardware. That's for sure. Google are an advertising company. I can only conclude that by hosting your data on the cloud, they will:
1) Mine your saved information to build a profile on you so that they can serve you targeted advertising.
2) Mine your saved information to build a profile on you so that they can sell your profile to somebody else, who can then serve you targeted advertising.
One day, you will click on a link in your favourites, and Google will say "We're directing you to <web site> right now, but while you are waiting, here's a video from Motorsport Magazine and a voucher giving you a 10% discount on a years subscription." They can do this, because of 1 and 2 above.
Then, later on, much later on, you will find an email in your GMail, which you never read, since your main method of communication is Facebook/Yahoo Mail/Whatever which will say something along the lines of "Hey! We've updated our T&Cs with a teeny weeny change. No big deal, check it out when you can". You will of course ignore this email.
However, the T&Cs will say "Hello. All your files are belong to us. If you don't agree, delete them within 14 days. Love from Google. Do no evil."
So, all those photo's of your kids when they were babies will belong to google, to use elsewhere on the web, or sell to advertising agencies. That blog you are writing? Google's. That book manuscript you were writing? Google's, and they've already cached it anyway and it's fully searchable online, so thats your book sales gone.
Basically, it's the privacy equivalent of Facebook, cubed.
You will be touching up a photo 'in the cloud' when Google Chrome will say: "Hey there! Based on your location, we've uploaded your photo to a local photographic agency who will provide you with a top quality, framed print for only £49.99! Mention Google for a 10% discount!"