My iPhone 4 (iOS 5.1.1) only lets me take 50 photos before it fills up. My Photo Stream album has 1000 photos in it. Is that preventing me taking more photos?

Question

The iCloud FAQ seems to say iCloud does NOT automatically physically download and store all its photos back on all your devices, yet I'm sure the reason I can't take very many photos is because iCloud is doing just that....sending photos I already deleted from the phone's (non-photo-stream) standard photo library back to the phone and thereby filling up my phone's hard drive. I thought PhotoStream and iCloud held your photos in the "cloud" so you could view them THERE; but it looks like when the "cloud" is "full", the phone is full too (the FAQ says photos don't affect the 5GB free storage on the cloud, yet it sure seems the "cloud" affects the storage on my phone).
Is there a way to tell iCloud to NOT use my phone as it's hard drive?
I like the concept of having every photo automatically uploaded to the "cloud"...but shouldn't I be able to take more pictures when the "cloud" is "full" with 1000 photos?
If I delete the photos from my photo stream album, it says all the photos will be deleted from everywhere, including the "cloud". And, the only way to save them is to manually save them to the phone (they're already there....as described above) or manually save them to iPhoto (my Mac is an older MacMini that can't use any OS above 10.6.8, so iCloud isn't available to my desktop Mac).
Here are the options as I see them:
1. Turn off PhotoStream and give up on using the "cloud" or "iCloud" entirely. Make sure to back up those photos I want to keep regularly in iPhoto when I back up my phone. (I had this naive idea iCloud was intended to simplify this....)
2. Manually go through the 1000 photos that are apparently now back on my phone in the "Photostream album" and decide, viewing them ON the tiny phone screen, which ones should be manually deleted and which to keep, hoping that frees up enough space on the phone to be able to use the camera.
3. Just delete the entire photostream album, and therefore all the photos on my iPad and in iCloud, and accept that I didn't really want them anyway?
Is there any other option? Do I have to choose between PhotoStream and storage space on my phone, if I want to use the phone's camera after "1000 photos" reside in iCloud? The way it seems to be going, I will ALWAYS be fighting for storage on my phone as long as iCloud is "on"...no sooner than I delete photos from Photostream, every new photo will just be downloaded BACK to the phone anyway.
I'm almost at my wit's end.....is iCloud/PhotoStream ALL OR NOTHING?

Answer 1

Please disregard this question. I'll submit a shorter and more direct question. Thanks.