For me, either. I just bought a 160 gig iPod Classic for just this reason. I want to “feel” my owned (not borrowed or rented) music in my pocket. 
Here are my reasons and also some fun (not real reasons) observations thrown in:
- Unless you’re syncing, it’s completely infrastructure-free.
- Songs can’t be removed by someone (like an artist dispute deciding they don’t want their stuff on a given cloud service, etc – like the Beatles original stance with iTunes and what happened on Amazon’s Kindle with some books being pulled by the publisher).
- There’s no matching technology to fail and it works for music not in the match.
- It works where (or when) there’s a spotty or no internet connection (off the grid backpacking, etc., traveling, power outages, services outages, blackouts and a zombie apocalypse.
- It doesn’t eat into your limited, throttled and precious bandwidth.
- It doesn’t have to share (and steal) battery juice from your mission critical telecommunication device (your phone). so you don’t have to worry about, or ration your listening.
- The battery on the Classic lasts just about forever – it’s amazing how much modern battery technology paired with a older, less CPU utilization dependent device, gives you in terms of battery life.
- You don’t get interrupted with popups, alerts and status messages.
- You don’t have to think about what playlists you might want for the day – all your music is on it.
- You can put high quality, uncompressed Apple Lossless or AIFF songs on it.
- No one else decides for you what the bitrate or audio format should be.
- You get a nice “retro,” battle-tested UI that has the singular focus of navigating music (there’s something really nice about that).
- It doubles as a removable harddrive that is always in your pocket.
- You can listen to music (without problematic, sonically challenged bluetooth) and still have your smartphone or tablet use be a “wire-free / tangle-free” experience (since you’re listening to a different device that’s in your pocket).
- The housing, with it’s stainless backing, just feels good in the hand in a way that’s different than the iPhone 4/s.
- “Genius” is pretty amazing when it has 100+ gigs to work with.
- Even if iTunes stopped supporting it, and it was buried in drawer for 20 years, if you could find a way to charge it, you’d have a standalone, working, time-capsule of music – it would still function as it requires no external infrastructure (once the music’s on it). A silly observation, but there’s something kinda cool about that. It’s a sort of commentary on technology; the more it becomes fragile with interdependencies, the more I appreciate those technologies that are able to gracefully degrade to infrastructure-less devices (the Amazon Kindle is also like this as are two-way radios).
All that said, I really love Google Docs, in the cloud. And, I’d be fine with my music in the cloud and also stored locally / in my pocket, just not only in the cloud.
But, SoundCloud isn’t really a cloud service for storing your music, it’s a way for distributing and marketing your own music and discovering other’s music – a totally separate debate from things like Spotify, iCloud, etc.