With or without is fine with me. As to cloud storage, I will say it's ultimately more reliable - remember, while the phone could indeed fail, so can the SD card. For me, the qualifier is having ample phone storage - of any type.
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And remember.. back up to cloud storage is only as good as your wireless or wifi coverage, and data plan, and what files can be backed up. Have a limited data plan? then you need to set it to backup only when on Wifi. Take a video or picture and not get to wifi and have the backup done before you drop/break your phone... and you lost your pix/video. Connected to wifi for only about 15 minutes? is that enough time to upload all your new/changed files to the cloud? If not, you'll again be at risk for loosing things.
Need pix, video, music, PDF, word doc, etc when you're out side of cell or wifi coverage? Cloud wont work for that, local storage will. Taking a trip on a plane and want to watch a movie? So sorry, you can't unless you pay big $$ for on board wifi (if its available on that flight) because its in the cloud and you don't have access. What about listening to toons? um, Nope, same.
What about streaming while driving in your car. If you have an unlimited data plan, and good data coverage, ok, you can stream. What if there is a small break? the song will stop depending on how much might have cached on your phone, what if you go into a dead zone, tunnel, etc? Nope, can't. And if you have a tierd data plan, well, lets hope you have a higher limit.
Not to mention speed of your data connection will impact the streaming quality of your audio/video. Local storage will not.
Besides trips, driving in the car, or at my desk at work, there are times I've wanted to listen to music, watch movies. Local storage was better. There are times while building our house, we met with the builder. Having the documents on my phone so I could refer to them (the floor plan, option selections, etc. in PDF, XLS, and .DOC) was a big help. Often there was little/no signal in their office, despite having coverage while outside.
Don't get me wrong, cloud storage can be good, but its not good enough, and certainly doesn't meet my needs.