The answer is, it totally depends on the user. But most of the time, for most of the people, iCloud is better.
Dropbox embraces the past for current computer users with years of experience, whereas iCloud is the future of file management for consumers in a Post-PC world.
So to get everyone up to speed, iCloud is the service in iOS (iPads, iPhones, iMacs, etc) that automatically syncs your documents. You edit using Pages on your iMac and it syncs to Pages on your iPad. The defining feature of iCloud when compared to Dropbox is that the documents are in a virtual “silo” per app. Meaning your Pages docs are only available in your other copies of Pages, on your other Apple devices. Your Keynote presentations on your Mac sync to your Keynote app on your iPad. It all works seamlessly in the background.
Dropbox is different. It is a folder on your hard drive that syncs to a virtual folder than in turn syncs to another folder on another device you have. Basically it is a large folder “in the cloud” that apps can tie in to and you can have on most all your devices and computers. It is the most flexible and least inventive. iCloud is the most inventive and least flexible.
So if you are a computer geek who has been working with computers for decades, of course you will like Dropbox, since it is almost exactly what you have been using for years. You can create folders, move stuff around, mix different types of files, whatever you want. But in the end, it is merely a virtual folder that works just like, well a folder. It requires organizing, management and works like a dusty old file system from the 80′s.
Apple is aiming to do away with file systems. I agree that this is the best path. Tablets and computers should do the heavy lifting and make things easy for you. You should not need a degree in computers to operate any device these days. If you ask a new computer user on a PC where all their files are, they may not be too sure. But if you built in a system where docs sync automatically between devices and were available right in the program, they may have an answer for you.
In the end, phasing out file systems is the best plan for consumers. Again, not computer nerds, but for the general public. No one wants to do housekeeping with files and folders, especially on a tablet. Apple has done a terrific job with services such as iCloud and Photo Stream, you create something, it syncs to all your other Apple devices. End of story. PC and Android users are infuriated by this lack of control and often don’t see the benefits of the automation. There is also a trust issue, letting your content sync and backup automatically instead of manually doing it yourself. But sometimes to be free, you need to let go.
Google and Microsoft are not taking the automatically syncing content in apps road, they are just developing Dropbox clones (Google Drive and SkyDrive respectively) so Apple has a wide head start with their concept of eliminating file systems. It’s also important to note that iCloud is not done. It’s an evolving (and fairly new) platform that will continue to grow. This year’s Apple Worldwide Developers Conference (WWDC) will no doubt bring even more features and options to extend the platform.
So all the computer users who have been using file systems for years are clamoring for Apple to develop a Dropbox clone. Spoiler alert: they won’t. They won’t set back years of iCloud development to create a file system folder-based syncing drop box. They had one for MobileMe, called iDisk, and they canned it. Anything can happen, but I anticipate iCloud getting more and more robust, staring at file system management in its rearview mirror.
One final note that is not often brought up. Using iCloud for files is completely voluntary. You can bypass it and save to your desktop or folder or Dropbox or wherever, at any time.
In the end, Apple will leverage iCloud to make it’s software and hardware easier and easier to use. Where you are a creator rather than a manager. It’s the best solution for a Post-PC world and the best option for consumers and new users of Apple products. And someday, it may be the best option for you as well.