This certainly isn't a reason to suddenly delete your Dropbox account. Based on the previous actions of Dropbox regarding their TOS, I'm sure they will come out and clearly explain to users exactly why this change was instated and what it means for users, and I honestly doubt it's anything too serious for us to worry about.

They accumulated enough, this was just the one that got me to do it. For these purposes i did use Dropbox i need a service i can trust.

What matters is what it says, not how Dropbox spins it. It says pretty clearly that I'm granting them unrestricted rights to do just about anything they want with my content INCLUDING performing it and making derivative works.

yeah, they've become really bad. i loved the service but moved to spideroak last week when i read that anyone could access my files with any password, while they fixed a bug. that along with the privacy/encryption stuff convinced me to move. wuala seems to be the most secure service i've seen though.

Absolutely, client side encryption is the only way to go in my opinion.