"Backups" suck - it's a hassle to restore them, and due to all kinds of reasons how hardware can die, some restoration is needed every now and then. On the other hand, if all your [important] data automagically syncs on the cloud, you can take any blank computer and be productive within 30 minutes.
If your everyday environment is VM's on the cloud then you don't need even that and you're good to go from any device instantly, but it's a bit too limiting for me - but keeping all data + portable executables with config on Dropbox is simple, and leaves actual backups only as emergency precaution for cases if the cloud services screw you somehow.
I haven't checked Dropbox t&c's but I wonder whether backups come under its 'suitable for' uses. Ie: do they consider it a highly reliable form of storage.
Personally I wouldn't trust any cloud storage with hundreds of gigabytes of family photos and movies. I have multiple disks on site and one truecrypt terabyte disk offsite which is rotated regularly.
For work/code though the vm + cloud is a good solution.
T&C is a fairly useless as a suitability measure of anything. Sure, I'd use another "proper" backup service - but the expectation is that I'd use Dropbox in 99% of restoration needs and the other one only in the chance that, say, Dropbox dies - which hopefully happens less often than my computers die.
For personal data, Dropbox's versioning has been a lifesaver for me - if I have overwritten or changed something, I can get back also the previous versions; quite a few backup solutions don't keep the history. But for me the important data is various documents, so it's not that large - for example, I personally don't see the reason for making family videos, as even for our wedding video we just browsed through it once and haven't touched it in all the years afterwards, there's new stuff to do instead of watching old stuff.
If your everyday environment is VM's on the cloud then you don't need even that and you're good to go from any device instantly, but it's a bit too limiting for me - but keeping all data + portable executables with config on Dropbox is simple, and leaves actual backups only as emergency precaution for cases if the cloud services screw you somehow.