It's not just documents and apps that will be using iCloud. Apple has just announced Photo Stream, which will sync the camera roll on your iPhone or iPad to the cloud, then keep your other devices updated, including your Macs, using iPhoto or even a PC where your photos and videos will show up in the pictures folder.
Of course, Apple TV 2 will support Photo Stream as well. Your last 1,000 pictures will be stored in the cloud, but only for 30 days. Apple doesn't intend to replace all your local storage, but instead, provide a robust syncing service.
So take a photo on your phone. In an instant, it is on your iPad, in your iPhoto library and available for big screen display on your Apple TV connected set. Go on vacation, and your pictures will be home before you are. Apple is talking about Wi-Fi, so no word on if the service works over 3G.