From the article:
> Additionally, the free storage wars aren’t a sustainable place for us to be, particularly with other services now regularly offering 25GB-50GB free storage.
In other words, they can't compete with Dropbox, Box, SkyDrive, Google Drive, and whatever flavor of the week is next week. It's a distraction, so they're focusing on making the OS better and getting out of the cloud storage business.
They can probably tell that there are people who rely on it (active usage logs and all that), and to those people this is a Big Deal. But those are also the people that would be underserved by U1 going forward, so it's best if they get out now.