Here is what Tor claims to solve on its download page [0]:
"The Tor software protects you by bouncing your communications around a distributed network of relays run by volunteers all around the world: it prevents somebody watching your Internet connection from learning what sites you visit, it prevents the sites you visit from learning your physical location, and it lets you access sites which are blocked."
That statement is not exactly true in the case of that Harvard kid. A sysadmin and their logs is still "watching", and in this case eventually found out which site through news channels ;).
That's not to say that I think Tor isn't great nor that it shouldn't be used. My complaint is that it gets represented to general non-technical crowds as solving more problems than it actually does.