Is it really not possible to use photostream with a me.com account?

Photostream used to work for me, but not anymore. I'm connected to iCloud using my me.com address. Works great for contacts, calendar, notes, etc. Not working great for photo stream anymore. Not sure when it broke.

Anyway, here is what is happening now. Clicking on the photo stream "source" in iphoto, gives me a splash screen informing me about the wonders of photo stream, tells me I'm logged in as xxx@me.com, and gives me the option to "activate photostream". I click activate and an alert drops down telling me I have to login with my icloud account in the system preferences. clicking okay sweeps me away to the icloud preference panel, where we can find out that I'm already logged in. Checking the box next to photostream, produces an alert panel telling me roughly:

There isn't access to photos in icloud account xxx@me.com. Check your account information in system preferences.

So... what? Does it really want me to login to icloud with xxx@icloud.com instead of the existing me.com login?

I got started on logging out of icloud and then back in, but it tells me on logout that I have the choice of duplicating my contacts or deleting them. Neither option sounds appealing. Choosing "keep a copy" leads me to the choice of having all my calendar info nuked. I canceled. Maybe I don't need photo stream after all. Somehow, I thought it would just work like it did before.

Anyone else have this problem before? How did you fix it?