So you think this is the wave of the future? Everything online and nothing local? I'm not sure I like that idea. It definitely will redefine "privacy" if that happens!
Just because something is stored on the Cloud doesn't mean it is public. I wouldn't trust facebook with any sensitive information but that doesn't mean Dropbox or Google Docs aren't secure places to keep things private. As part of my work I help customers deploy systems into the cloud that have to handle private data securely all the time.
You could regard a local computer - particularly a portable one - as vulnerable. It can be stolen, if it isn't updated frequently or properly firewalled it can be hacked. Just because the data is physically close to you does not always mean it is protected to a higher standard. I'd trust the cloud with my family photos far more than a local computer, as if my disk fails that's a few decades of memories lost*
If you've ever bought anything online then you probably already trust some internet systems enough to let them charge you.
I'm not disagreeing here, you're right - privacy is a concern. I'm just pointing out that privacy != cloud.
A key concern for me is actually fragmentation. Instead of keeping my files on my computer, they are spread around various sites - Google Docs, Dropbox, Picasa, Pivotaltracker, lovelycharts, liquidplanner, etc. Getting them all to talk to work together in the ways that are important for me might be an issue.
*assuming the backups were lost too, natch.