You can't rely on the cloud or even assume everyone else that buys the system does so as well. There's data caps from various ISPs as well as bandwith speed limitations. The dedicated to the most casual gamer would not put up with having to wait an average of 1 to 5 minutes for a game save to load, simply to compromise faster level loading times. (if not, see how happy the wiiU owners where about that 5gb+ patch they got on week 1) An HDD is still a viable and preferred option over a space-limited SSD
You don't have to RELY on cloud storage, it's an OPTION. Sony still sells a 12GB PS3 and it launched with 20GB and 60GB so even the 120GB would be perfectly functional even without an internet connection at all. The PS4 games would still play off the discs and while they may have an OPTION to install parts for faster load times they wouldn't REQUIRE it. Save games would still load and save locally they'd just sync to the cloud (if available) so again if a connection isn't there you're still fine (you just can't go to a different PS4 and continue where you left off). If you chose to store Movie and Music in the cloud instead of downloading it locally you could play it by streaming it instead of having to fully download it each time. You could play that stuff anywhere too, off your phone, off your tablet, off your PC just log into your PSN account through a browser and stream away. If you don't have a connection though that stuff is all optional you can still play PS4 games off discs, Blu-Ray movies, etc. just fine.