Then you can't put photos on the public web at all, right?
Well I choose what to put on the "public web". Unlimited photo storage means all your photos.
How would a user be forced to upload all of their photos? I have (allegedly) unlimited storage with Flickr, but I manually upload the photos that I choose.
They're not forced to, they're tempted to. And most people will. From the presentation, it looks like as soon as you take a photo it's uploaded and backed up on Google's servers.
This is pretty much what I try to do. I avoid people taking photographs of me altogether or if they do, I request them to not put them on Facebook or anywhere on the Internet. It usually works if you ask kindly.
So what happens if you, say, XORed the entire image with 0xA5A5A5A5 and then uploaded it?
Seems Flickr doesn't really examine the image, just the extension (.gif, .jpg, etc). I wonder what Google plans to do.