The performance of the Air is OUTSTANDING. It is the fastest laptop I have ever owned, and I have owned A LOT of laptops. The number of photos you can store is dependent on the size of the internal hard drive on the computer. You dont mention which model you are looking at, but the 13 inch Air can be configured with a 256GB flash drive. This is NOT a very large drive in terms of average storage today. MOST computers come with 500GB drives, but they are the standard spinning drives, and NOT the super fast, flash based drives that come in the Air.
You will need updates MUCH sooner than 3 YEARS on the Air. They are released pretty regularly. Lion, the lastest version of OSX, is available in the App Store, which is downloaded to your computer and installed from the hard drive. There is NO need for a DVD drive to do an OS upgrade. All future updates will be released in the same manner as Lion was, and all you will have to do is purchase it from the App Store and let it download to your computer. If you ever have to REINSTALL the OS, then there are options when you boot the Air on ALL new computers that allow you to do a fresh install from the internet. Although, if your internet connection is slow, this will take quite a while. There is also the option to either CREATE, or PURCHASE a USB bootable drive to load the OS from. There is a utility on the Air that allows you to create this disc, and it is a much cheaper option than the drive that Apple sells in their store.
Lastly, you already answered your own question for the final part. An external drive is going to be your easiest option. ANY external drive should be usable with the Air, although you may have to format it to the OSX file system. I hope this helps out.
xandris, thank you so much for the post. you answered everything throughly and i appreciate that. i decided to go with the mac pro. i just couldn't get past having to have the external hard drive. the air had some appealing things to me but just decided the pro would be best.
now i am trying to decide about migrating "what" off my old ibook on to it.
thank you again for the long post.