Recently, Consomac.fr found code references to a service called 'Castle' inside the developer preview build of OS X Lion.
TechCrunch has confirmed that 'Castle' is Apple's upcoming cloud service overhaul.
The original nickname was "Newcastle", but that got shortened to "Castle" at some point recently. And the actual shipping name of the product may still be up in the air. At the very least, it is still being called "Castle" internally for the moment. And yes, as we first reported back in March, this service will be unveiled at Apples WWDC event in June.
It's believed that Apple will use the term 'iCloud' when launching the service; rather than the internal 'Castle' name.