There are so many issues, one is certainly cooling, but another is interconnection. I can see how the delay from earth to satellite may not be a huge issue, you don't use the space cloud for stuff that needs "instantaneous" responses but that still leaves the problem of connecting the small data centres together.
And as for the cooling yes there are ways to do some cooling in space but the server racks necessary on the earth are stretching what cooling can cope with and those options are simply not possible in space.
Plus of course sooner or later we will achieve the density of satellites to see the Kessler syndrome in action.