I agree with TenaciousSnake7. The cloud storage should basically be a bi-directional sync with your hard drive. That way, you don't need to be connected to the internet to access the information but you can still access it remotely. Hopefully, this is how Microsoft is implementing it already.
I really like the cloud storage feature since a lot of games are getting more social, especially Kinect party games. If you visit a friend to play Rock Band, Dance Central, Kinect Sports, etc... then you want easy access to your profile so that you can play with your avatar and also get credit for your achievements.
Bravo on this one, Microsoft.