Q: what is the difference between iCloud storage and iCloud Drive?

iCloud storage is the storage you have in your iCloud account.  Each account comes with 5GB of free storage, with the option to purchase move if needed (iCloud storage upgrades and downgrades).  iCloud drive is an optional service that uses this storage (https://www.apple.com/ios/whats-new/icloud-drive/).  Be aware that you will not be able to access documents stored in iCloud Drive from your Mac until you upgrade to OS X Yosemite later this fall.

For my iPhone 5:

Why would I purchase more iCloud space if I can store in iCloud Drive without the expense?

Is it just the convenience of the automatic backup in iCloud?

Can I store my photos in iCloud Drive.

Answered in your other post with this question.

You would purchase more space if the items you are storing on your iCloud Drive + the size and number of your backups to iCloud + the size of your Photo Library, if you are using iCloud Photo Library all add up to more than the free 5GB provided by Apple.

GB