Cloud helping out isn't bullshit, it can help improve things.
However, Cloud turning an Xbox one from a system that is 8 times faster than the 360 to a system 32 times faster than a 360 is IMO - bullshit.
Two things are holding the cloud technology back in terms of gaming right now:
1. It's a technology in its early stages, even in business. The company I work for uses cloud technology to compile and deliver reports for thousands of companies in retail. Even though we work in the cloud, we still have to battle the buzzword aspect (aka the pie in the sky bullshit) that sales people promise the cloud to be. It's not mature enough yet to deliver in the manner it takes to do what MS is promising. So, this application of cloud technology is one that won't be realized until much later in the gen.
And even then, we'll have to contend with...
2. Infrastructure issues. Let's face it, many areas (especially in the US) don't have anything close to the infrastructure necessary to deliver what the cloud could be capable of when it's a mature technology in gaming. I personally have a DSL connection that could pull it off - which is awesome considering I live in a rural area, but people just a few miles away in other towns are stuck with lesser connections or, even worse, something like satellite, which is high latency and has speed that are all over the place on a good day. So, even when the technology at the server/datacenter level is there, and programmers have figured out how to utilize it, the pipe that will deliver it may not yet be there for a good portion of the population.
So, while the technology is anything but bullshit, it's also not mature enough to handle the promises that are being made, and still dependent on outside factors that could still hinder adoption of cloud computing to the level MS envisions.