ICloud & storage space on iPhone

I'm looking at purchasing the iPhone 4S. Before buying it, I want to learn more about iCloud as it will likely influence what size I buy (16, 32, 64GB). I have looked at the webpage and video but am still a little unclear about a few things:
1 - Will iCloud only store music purchased in iTunes? I have downloaded much of my music from other sources. Currently on my nano, I want to know how this will affect storage space.
2 - Will iCloud automatically keep all of my apps/downloads? Will they only store on Cloud or will they still take space on phone too?
3 - How much control do I have over what is kept on iCloud? I am currently an online student and being able to work on my course assignments from the iPhone will be great. Can I move things as I see fit or does the program determine this?
4 - Anything else I should know about storage and iCloud? I am trying to determine how much storage I need, thus affecting my cost. I want to have a better understanding of iCloud and how it may benefit my storage space.
Anyone who can offer any insight will be grealy appreciated. Thank you!

krkilgore wrote:
2 - If I'm getting this right: By putting the file "as is" on the iCloud we can then sync between my Macbook Pro and iPhone... Do we select/upload the files as needed or does it just copy everything?
Although the final details of iCloud have not been revealed yet, logic would indicate that you'd have control over what non-iTunes material gets sync'd to iCloud. Otherwise, if you didn't have some sort of control then every non-iTunes item on your Mac would go up to the cloud, not something everyone would want. Once iCloud is released and in use, then we'll learn more.
Also, for your university work there are other options (e.g. Dropbox, SugarSync, etc.) that let you store and edit documents in these other cloud storage services, with apps for your i-device to access and edit them.

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