With the UI changes and the focus on making this product relevant again, Yahoo is continuing to make strides to be a competitor in mobile, search, and the current web hierarchy.
1 Terabyte is a significant leap in free disk space for users, but the real story in this announcement is that Yahoo is not the storage space or the UI. Yahoo is stating that it is out there competing and trying to offer compelling experiences, great value price propositions to consumers, and maintain/grow its user base.