Clouds: Warming and Cooling the Earth
Clouds exhibit schizophrenic tendencies with respect to Earth’s energy budget. They reflect incoming solar radiation and thereby promote global cooling. Simultaneously, they absorb longwave radiation from Earth’s surface and radiate some of it back to the surface, thereby promoting global warming. On balance, however, clouds reflect more solar energy than they emit back to the surface. Therefore, the net forcings or radiative emissions that transfer energy from clouds to the planet’s surface—although they vary with location and season—are negative on average: Clouds generally cool Earth more than they warm it. 
As global temperatures rise, evaporation of water from the oceans increases exponentially. This is partly responsible for the heavier cloud cover that has resulted over oceans and has decreased net forcing from clouds, counteracting to some degree global warming, although warming still has occurred. General trends with clouds are apparent, yet mathematically describing cloud formation remains a major challenge in developing accurate computer models to predict global climate change.
 Ramanathan, V., R. D. Cess, E. F. Harrison, P. Minnis, B. R. Barkstrom, E. Ahmad, and D. Hartmann (1989) Cloud-radiative forcing and climate: Results from the earth radiation budget experiment. Science 243:57-63.
This is an excerpt from the book Global Climate Change: Convergence of Disciplines by Dr. Arnold J. Bloom and taken from UCVerse of the University of California.
©2010 Sinauer Associates and UC Regents
CitationBloom, A. (2012). Clouds: Warming and Cooling the Earth. Retrieved from http://www.eoearth.org/view/article/51cbefff7896bb431f69fd6c
Cloud behavior is indeed a multifaceted process. As mentioned in the very good summary above, clouds exert both warming and cooling functions. This varies with cloud type and altitude - low stratus and cumulus clouds tend to cool while high thin cirrus clouds to warm. The increase in evaporative rates with warming is accompanied by an increase in atmospheric water-holding capacity, as dictated by the Clausius-Clapeyron relationship, and so a net effect is hard to predict. ISCCP and HIRS data indicate that total cloud cover has either remained constant or declined slightly over recent warming decades, while the high/low cloud ratio has tended to increase. This global average also appears to resemble ocean data, which also suggest a decline in low cloud cover - see Eastman et al - J. Climate 2011.