Storing individual wallets in the cloud is better than have a single institution-wide account that holds everyone's money like MtGox did/does. With the latter,

Storing individual wallets in the cloud is better than have a single institution-wide account that holds everyone's money like MtGox did/does. With the latter, you need to roll your own secure transaction system to keep track of balances. The former uses bitcoins existing transaction record keeping, allowing the devs to focus on the already hard problem of secure authentication. Still, centralizing a decentralized system is like trying to tame a wild animal. I can be done, but expect to get bit.