Cloud storage means that, rather than just keeping your save game data on your PlayStation 3's hard drive, users will be given the option to upload their saves remotely to a server. The advantage of this is that not only does it save the user space on their hard drive, but since it's tied to a PlayStation Network account, it can be pulled down to different consoles whenever and wherever the user desires.A couple updates from now Sony will announce that multiplayer-enabled gaming must rely on this cloud mechanism, which is the beginning of the end for any efforts to exploit the firmware. A couple updates after that, all games will at the very least dump a digital signature of save files to this cloud, so good luck trying to edit a save game.
This is not about right or wrong, it just bothers me that none of the news outlets reporting on this is trying to extrapolate what this kind of mechanism means beyond the obvious insurance against the console dying. You wouldn't even need the whole save file in order to perform this kind of control, all that has to happen is for the game itself to generate a signature for each save file and send it to Sony's cloud. Try to run a saved game with a signature that doesn't match (which means the saved game was not generated by a trusted app) and the game won't work online. And you would not be able to fake the signatures.
At least that's how I would do it.