Looks like an interteresting solution for wordpress.com hosted websites. However, isn't this something wordpress.com already handles under its own domain? (Which can be the reason why. DMCA policies could kill a company within a month)

Also, it looks like a great option to backup large files.

For selfhosted websites (wordpress.org)?
Included as an option into Jetpack, sure. Brought as a plugin, sure. Included as an option for selfhosted websites, another sure.

As a full replacement for the current (selfhosted) media library, absolutely not.

First, there's a huge trust issue. Will Cloudup (as a 3rd party solution) still be there after a year, 3 years? Rapidshare(.de) would be a great example.
Also, WakeMate can be included to this list. (Don't know any of its technicalities besides knowing that it was somewhat supported by Automattic. I'll be happy to comment if I'm completely missing the point here)

Besides that, if WordPress will make Cloudup as a full (selfhosted) media library replacement the whole idea of "More than just a blogging platform" will be completely gone.