You have to login with your account, typically tied to a credit card with purchase power. Something you don't want to hand out. They do need to charge more, or give credit for different filetypes. Just as MP3s purchased through the Amazon MP3 store do not count against your storage limits, any other digital good stored there would also not count against limits. The price at the high ends is prohibitively high enough that it doesn't automatically spell the death of longer established (and imo better, at least at this time) cloud storage services.
What this does though is makes it a profitable conclusion for one to stop purchasing music through itunes, and instead purchase through the Amazon MP3 store. It also doesn't put streaming DJ services out of business. Pandora, rDO, Mog, Grooveshark, Spotify, whatever. There's a new one every week, and lots of them are arguably good services. But to the person that might consider themselves an audiophile, or who might want to generate their own playlists, or listen to an entire album...they don't do it.
I for one think these are exciting developments. A player as large as Amazon casting a disrupting technology into the wild -- that's dynamite into a crowded board room of music executives. And if they push this to movies, video, games as well?