What is iCloud? Should I use it for my iPhone?

iCloud is cloud service offered by Apple. It is currently free for if you only its basic services.

iCloud currently offers the following free services:

• Data Storeage - iCloud offers 5 GB of storage in the cloud that you use to store your data.
• iPhone and iPad Backup - iCloud can take a backup of your iPhone and iPad and store the backup file in your cloud storage.
• Application Data Syncing - iCloud can sync application data like contacts, calendars, tasks, bookmarks and photos between your iPhone, iPad and laptop computers.
• Find My iPhone - iCloud can track the location of your iPhone on a map. If you lost iPhone, you can locate, lock or erase your iPhone.
• iCloud Keychain - A securely encrypted file in the cloud to store user password, credit card number and other personal information to be auto-filled you when you need them in Safari browser.

Yes. You should use iCloud on your iPhone. The backup service is useful, if you lost your iPhone or change to a new phone set. But if you are using iCloud, your phone usages and locations will be stored in Apple data centers in addition to your wireless carrier. Do not use iCloud, if you are concerned about your privacy.