If Apple’s going to embrace the cloud wherever possible, it needs to change iTunes too. The program should be simpler. It might be better off being split into separate apps, one devoted to device syncing, one devoted to media playback. (And perhaps the iTunes Store could be broken out separately too? When Apple introduced the Mac App Store, it didn’t roll it into iTunes, but gave it its own app.)
It is a weird approach to just keep piling features into the same application, but Apple just keeps doing this with no end in sight.