This post by Bradley Chambers is spot on: Regular People Have No Idea How to Manage Photos on Their iPhone. It’s really bizarre that Apple is so consistently behind when it comes to iCloud storage and photo management. Key point:
Also, photo stream needs to be reversed. Apple should store ALL photos/video taken with your iPhone and just store the most recent 1000 (or 30 days) locally on the device.
(via Daring Fireball)