Unfortunately it also broke my secret iCloud dance and no matter of fiddling with the options would make my Documents & Data sync work again.
After some browsing through device logs I found this error:
com.apple.Dataclass.KeyValue is enabled for more than one account
I have been a long time subscriber of Apples MobileMe service. The migration process from MobileMe to iCloud, promoted my MobileMe email address to a full Apple ID. This really sucks as I already have an Apple ID that I have used to buy Music and Apps with since the dawn of time.3
On my iPhone I had added both iCloud accounts and just turned on the services I needed from each.4 Apparently this is a bad idea, and deleting the old MobileMe account made above error disappear and iCloud have been syncing my Documents & Data happily ever since.