On the subject, worth reading Charlie Stross' blog post, 'How low (power) can you go?' [1] and its potential impact on urban architecture and environments.
He puts out some interesting ideas, but he forgot that genome sequencing requires some occasionally toxic regeants that are incompatible with bolting DNA sensors all across town.
He's spot on about the data firehose problem, though. IoT data usage patterns break all kinds of assumptions that network and storage engineers have about how computers do stuff. The packet sizes are really small, so routers have to work way harder, and all those tiny I/Os blow through IOPS way more than a typical web app does.
And then there's the data formatting issues, like how searching this pile of stuff makes you want to put it in columnar formats but time-series type displays want row oriented formats. Oh, and the indexers. Ugh. A lot of good indexing code has trouble keeping their internal trees balanced with all the I/O going on at the same time the big data reporting stuff is going on a spelunking expedition through your storage. There's probably some group at Amazon going insane trying to come up with solutions to keep up with even the limited IoT deployments out there already. I wouldn't be surprised if their storage solutions are operating in a constant state of imminent capacity breakdown of some kind.
[1] http://www.antipope.org/charlie/blog-static/2012/08/how-low-...