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The problem isn't that the ToS is written in legalese. They are all written in legalese. There is nothing evil about legalese.
The problem is that this company is assigning itself an unreasonable, unnecessary and unethically expansive set of rights to other people's intellectual property - essentially every right short of actual ownership.
That isn't such a big deal if we are talking about what you type in to the Google-search box; it IS a big deal when the whole point of the service is to provide backup and synchronization for your personal data. If you are writing a book, writing software, using the service to work on some tracks or digital paintings or photos, it is pretty darned likely that you would use such a service for these things.
Are there ways to avoid the problem? Sure, don't use the service. But this kind of clause is still poisonous and abusive and should condemned by everyone. This isn't necessary and it is wrong, Dropbox should stop or they will continue to see this kind of bad press.
By submitting your stuff to the Services, you grant us (and those we work with to provide the Services) worldwide, non-exclusive, royalty-free, sublicenseable rights to use, copy, distribute, prepare derivative works (such as translations or format conversions) of, perform, or publicly display that stuff to the extent we think it necessary for the Service.
This lists pretty much every right other than actually transferring ownership, all purely to the extent that Dropbox thinks it is necessary for the Service. That's not paranoid, that's just reading what you are agreeing to.
Why would Dropbox think it could just take your shit and sell it (what you seem to think they are going to do here)?
Because that is what it says in the contract