"Cloud" file storage Vs. Self-Managed Servers (What's the big deal with cloud?)
Solution 1:
The big deal with cloud is flexibility, and you pay a slight premium for it.
If you need 5 TB all the time, buying your own hardware is more cost efficient (though you still need to factor in maintenance, warranties, replacement, etc). If you need 5 TB for a short amount of time, renting it through the cloud would be much cheaper than buying all that equipment.
The same is true of VMs and other computer resources. For instance, if you need a lot of processing power short time you might rent a bunch of EC2 instances. I know one big financial institution starting about 15,000 Amazon virtual machines every evening to do accounting calculations. The instances do not run for a very long time, making the process very cost efficient.
Solution 2:
The point is really the pay-as-you-use scheme, as well as the new space provisioning speed, that is faster than you buying more disks and etc. You also have less to manage and can work SLA's and so on.
Also take a look at this answer and the video referenced on it to see more about 'whats the big deal with cloud'.