Can't open pics in Preview since Mountain Lion install

Hi - I use Preview to open my iPhoto pics and then save them at a smaller resolution for using on my web pages, blogs, emails etc. It's a bit cumbersome but it works. Now, since I upgraded to Mountain Lion on my MacBook (so it will sync documents with my iPad) blow me - I find I can't open files in Preview! I get a box headed 'icloud for Preview.' The text then says: 'You can move your existing documents to icloud by dragging them here from the finder or other apps.' There's then an option to cancel, and a greyed-out box saying Open, but of course I can't open anything! It means, really, that I have lost the ability to edit my pictures with Preview. Is this right? And is there anything I can do about it? Also, I notice my iPhoto icon has disappeared from my Finder so I can't open iPhoto from there. It's all happened since the Mountain Lion install. Can anyone help, please?