[srainier]

Dropbox's core competency isn't cloud storage, it's continuous client syncing. If anything, moving towards not using the local file system at all hurts Dropbox, as they lose the part of their service that makes them special - syncing all files locally.

On top of that, I can't imagine removing a local file system would work as a general purpose solution. By the time network bandwidth catches up to today's bus speeds (probably years away), the new bus speeds will be that much faster, and that's what people will want. Managing files locally may be a pain, but that's a UI issue. Users want native performance. Cloud files are a leaky abstraction. Dropbox gives you local files and abstracts away cloud storage and syncing. That's the way to do it.