The cloud won't go away anytime soon, as companies will continue to push and prod us into storing data there, arguing it is "safer" than a crash-prone hard drive. And I know a lot of folks who have lost albums of data and their entire music collections as iPods or hard drives crashed and were unrecoverable. Of course, they failed to back up their data redundantly, so part of the error is on their part. Also, it is not a bad idea to just let data die sometimes. Keeping lots of records and stuff might seem like a keen idea, but it can be awkward and difficult. You really only need financial records back about 7 years or so. Keeping your old paper-route ledgers is really kind of stupid at this point in your life.
1. Your data can be hacked or stolen, if the cloud server is not secure. In the past, this seemed far-fetched. But major companies such as Yahoo! are being hacked with regularity, so the idea that your data is "secure" with a big company is sort of flawed. You may also be vulnerable to social engineering hacks if you are not careful. Either way, your data can be compromised.2. The company can lose the data. Servers crash and backup files can be corrupted. I am sure if you read the Terms of Service for these cloud deals, the companies absolve themselves of any liability for your lost or stolen data. If they didn't they'd be fools.3. Companies go out of business. As I found out the hard way with Webshots, companies can be sold and the new owners might decide to delete all your carefully manicured data. Webshots took all my photo albums, stripped off the lengthy captions and comments, and then tossed them into a bucket in random order. After a while, they deleted even that. One reason I got off Facebook (and earlier, MySpace) was that they kept changing the user interface, which required reformatting and re-doing your page again and again with each "upgrade" - it simply wasn't worth it after a while.