If you find Photostream confusing you don't need to use it. Simple as that. It's not even activated by default, you have to turn it on the first time you try to access it.

If you don't activate it, you phone keeps working the way it used to: you sync to your computer and thats that. There are third party apps that will let you upload to Dropbox and google+ if you prefer those as repository.

Now, the thing is that you want the convenience to have PhotoStream without worrying about space constraints. Ever.

iPhoto automatically creates a folder with all last month's Photostream pictures and I think thats default behavior, unless you purposely turn it off. To me, thats the most "smart" sync can get, unless you want Apple to store every photo you ever took, forever, in their servers. Having around 400 million iOS users worldwide this seems to me a little unrealistic at the moment. Maybe someday.

But for me the key here is just being able to delete your own content. You don't expect the memory card in your camera to last forever, you periodically format it. You don't expect your download folder to hold everything you download forever. Every now and then you go in and clean around. Your phone (ioS, Android or whatever) is no different. Go into that Camera Roll and start cleaning around.

Unless you turn it off the option all the photos are already in iPhoto, ordered by month (something like "Sept XXX Photostream"). If you turned it off, just impoert all the photos before deleting to make sure you don't end up loosing any pics.

I agree on the video, though. Photostream needs to start syncing videos as well.