i too, muffed something up when i switched from a sidekick to a normal phone and ended up losing all of my contacts from my phone. Living in the cloud isn't that bad when you run the cloud server at home. Like for instance my SunRay Server, It was a physical device that I would plug my smartcard into before getting full network/root access on my machine. (no card, means no root)
If an attacker has physical access to the cloud servers then hell, he should just reboot them with live cd's and reset the root password, or just clone the drive.
I thought Google Docs was a cool idea for collaboration on a single doc like xls, docx, etc. Like for students grouped up on projects in college or something. If I were in such a situation I would back up the document every now and then sure, but would love to use Google Docs for such an application.
Plus there are utilities kinda like "time machine" from OSX but better, that can sync up your data to a storage server in your home is configured properly. One application I can think of is "rsync" This will check on a given time based interval any changes to a FS and duplicate the change somewhere else. With a backup utility like that I would trust the cloud.
As far as security goes.. Just don't use anyone else's networks to access your data. Use your own, secure connection. VPN is encrypted, ssh is encrypted, but all of that is "crackable" to a seasoned attacker. If you are behind your NAT at home, and you know how to spot phisihing scams (which now is easier than ever as the latest browsers, will show the domain in highlight besides the URL bar) you'll be fine. Keep your work at home or at work.
Google Chrome OS is very watered down for that reason - just follow the rules of being safe. Plus they probably just wanted to make an OS to sport ALL of their applications in one spot. Well, that was my intention when I made wnla.