I have an iPhone (iOS) app that keeps data in a local SQLite database on each device. The app is used to manage a virtual bank account for kids to track their allowance, spendi
Moving to iCloud is probably the best solution, as it is proven and made by Apple. You don't need to worry to much about the iOS 5 requirement, as according to most stats over 90% use it. iOS 5 is free to upgrade to. You could then rename your old version as Lite, and continue without syncing.
Syncing is probably one of the hardest things you do.
One solution I made is that all changes to a database leave a log, with timestamp, uniqueid and couple of other things to make sure the transaction is totally anonymous and totally unique. I have made an extremely simple web service that has two operations, you can add transaction to it, so I sync whenever the user is on wifi, so I push all changes, receive a result from the server, then delete the transaction records as they are synced.
The other action is to fetch the records, send the timestamp of last sync, userid and other.
All data is sent using JSON and received as such. It can easily handle tens of thousands of users, running on a small Amazon EC2 server.
This is pretty much how iCloud works, but I made this solution before iCloud. Now I am going to iCloud, but probably need to keep the server running for 1 more year or so, depends on usage.
Hope this helps you.