Aww, don't feel idiotic. Sometimes threads just don't catch folks attention. It was however, a reasonable enough question, and I certainly missed it first and second time
I think what you have done is confused photos in iCloud with the "new" Photostream feature of IOS 5.
Photostream automatically moves photos up to iCloud when you create them, say using your iPad3 camera, and then downloads them to your other iDevices, like an iPhone, iPod Touch, as well as now supporting other Apple desktop devices running OSX, and things like the AppleTV. The photostream works on a rolling period of 30 days or 1000 photos. So it's an easy way of sharing the photo content you create between devices. It is not the same however as just storing all your photos in iCloud. You can't do that quite yet. You still need to manage your primary photo library from iTunes on the PC.
More info here -
http://www.apple.com/icloud/features/photo-stream.html
Hope that makes you feel better