NOTE: as of 02-04-14. Canonical has announced that they will be shutting down the ubuntu one service, and in the process, will make the server side application open source as well, as detailed in their blog post
I've come across the Launchpad bug report which gave me some insight into people's opinions on the matter, but didn't explain why Canonical made this decision. The Wikipedia article on Ubuntu One didn't contain any links to announcements that would clear this up.
Question: Why is the Ubuntu One server side application proprietary?
This was a commercial decision made early on in the project. There where many rationales behind it, one of the predominant ones being that by making the server open source, anyone could set up a competing site with lower prices, effectively making the project hard (impossible?) to be sustained.
That said, many bits and pieces have been open sourced, and many more are to come. We are continuously exploring ways to generate revenue that at the same time allow us to shift away from this model. The cost of the infrastructure to give away free storage space and synchronisation to millions of users as well as a brilliant development team is hugely expensive, so it is a sensitive subject.
Everyone involved in the project is passionate about open source, and the majority of us are deeply involved in many open source communities.