iPhones are about the least rugged devices out there, a drop of approximately one foot is sufficient to break the screen and render it unusable. That seems to be the most likely point of failure, the ruggedness of the storage is secondary.
A hard disk will fail before an iPhone screen is dropped. But if you do kill your iPhone then at least you just buy a new one and type your details in and all your music is back again.
If you have all your files on your device there is no need to use the cloud. You could copy all the songs from your device to your friend's device, and vice versa, faster than downloading them all from a cloud account (not to mention data caps). Cloud-based storage might be useful for backing up unimportant files to, but another hard disk would generally be better for various reasons (cost, speed, security, etc.).
So every time you buy music you have to go to your friends house to back it up? Music is unimportant, you got the copy from them in the first place and they'll give you the same one again. The only important thing is to keep track that you bought it.
I don't use it myself, but I understand why people love it enough to pay for it.
I think you mean "if" not "when". (Why buy songs there, that seems a very expensive way to do it when they are freely downloadable elsewhere...)
Illegally downloading music isn't free. It takes time, electricity, bandwidth etc. You should treat it like a job, with the cost of the music minus your expenses as the pay. If you can make more money doing something else then buying the music is cheaper, which for a lot of people it is.