They can and have lost photos in the past. A friend who used to be a PM at Yahoo! lost some family photos that he didn't have backed up... so he was able to contact them personally, but I am not sure how it ended.
I use Flickr as my main storage site, but I have a custom script that backsup photos and some meta-data to my local NAS.
> 5 gigs for free with dropbox and icloud isn't enough.
I see this as a loss leader for dropbox, they offer you 5 gig for free and then try to convert you to paid services. The internet isn't free you know, companies need to make money :)
really? 5 gigs isn't even close to the amount I need. I'm already hitting my 100GB limit..and will probably buy some more space in the next couple of months.