Photo stream maintains a rolling collection of up to 1000 photos. Once you hit this limit, older photos begin to be deleted as you add new ones. To keep them permanently on an iOS device, save them to the camera roll (tap Edit, tap the photos, tap Share, tap Save to Camera Roll). To save them on a computer, copy them to another folder on a PC, or enable automatic import in iPhoto on a Mac.
Read this Apple Support official write up about iCloud photo streams at the URL below...
Basically, you can have 1000 photos in EACH photo stream !... and you can create up to 100 shared photo streams, in addition to the 1 default non-sharable photo stream they give you titled "My Photo Stream".
So really, you can store up to 101,000 photos , for free, in icloud.
As long as you never add more than 1000 photos in any one stream you will never lose any photos. They will always be stored for free in icloud, and you can always access them any time, either from a mac/pc browser or ios device (iphone/ipod/ipad).
If.... you do add more than 1000 photos to a photo stream, icloud only keeps the most recent 1000 and begins deleting the oldest photos in the stream to make room for new ones.... always keeping a 1000 cap on each photo stream.
So.... there are 3 things to remember if you never want to lose any photos and never have to keep your own physical backup :
1. Always move photos out of your "My Photo Stream" into shared photo streams (which you actually don't have to share with anyone if you don't want to), before it reaches 1000.
2. Never put more than 1000 photos in a shared photo stream.
3. If you ever get to the maximum 100 shared photo streams and have filled each of those 100 photo streams with 1000 photos AND you have your "My Photo Stream" filled up with 1000 photos.....then you have reached the 101,000 max for free icloud photo storage. At that point you can either delete old photos to make room for new ones.... or begin emailing photos to yourself and start using your email as a cloud based archive for your photos, and delete from photo streams after you have emailed yourself a copy (if you really want to stay away from getting involved with yet another cloud service product outside of Apple iCloud)
The likely reality is.... by the time you get anywhere close to the 101,000 limit....Apple will have already evolved the photo stream service to something we cannot yet imagine that will make the worry of hitting the 101,000 cap a mute thought anyway :)