I have just learn't that certain editions of Creative Cloud software (eg Adobe Illustrator) is different to the retail version. It has more functionality and has a higher version number.
Correct.
First question - are the files cross compatible so I can still open files of either version in either of the environments?
Yes 100% compatible.
Second question - Why are full price paying customers not getting the extra features?
Marketing.
Adobe wants everyone to join the Creative Cloud so they're progressively adding features to the Cloud versions to make the Cloud offerings more and more compelling until perpetual licensed customers submit.
I heard on Adobe TV on a web seminar that part of the reason is because its easier to apply updates to the versions on the creative cloud... which i thought was just utter rubbish.
Not easier, just quicker. In short, it's marketing again.
Adobe is simply trying to say that instead of inventing new features then collecting them and rolling them into a dot release or a .5 release, they can be progressively released via a Cloud update immediately i.e Cloud customers can get them earlier.
Convinced to join the Cloud yet? 