Cloud only service? I dont think apple would be that stupid...
I know cloud based computing and devices are very trendy and are more than possible for static devices but IMO its useless for a mobile device. 3G service even when you can get it is generally laggy and data rates are paltry. Add in the pitifully small data allowances and I really dont see how a mainly cloud based mobile device at the current moment in time is a starter. I really dont think anyone will appreciate having an expensive paperweight when you are somewhere where you cant get a signal. Additionally if in an area without edge or 3G(and often even in these areas) it will take forever to do the simplest task due to the fact that mobile operators networks just arent upto the task.
Admittedly I am talking with experience of the UK but I hear its a similar situation in the US, Canada, mainland Europe, Aus and Japan.