@PJames: Hard drive crashes suck whether they are on your drive or the one you rent space on from Yahoo. Long term products may be judged on the quality of their cloud services and cloud services may be judged on the quality of devices optimized to use them. That could give Apple another edge.
@Dylan: Can't believe I wrote a whole Apple/Google story without mentioning the iPad and Honeycomb. I must still be a bit jetlagged here in Taipei this week ;-)
Two important aspects that will determine the success of the "cloud" will be security of the data and availability of support. Hopefully Apple will set a standard far above the norm, which is rather awful.
I had a nightmare scenario where years worth of sent email disappeared from my Yahoo mail account. After wasting much time trying to get help from Yahoo, I basically got no support and no return of my lost email. So much for the safety of a data center. Individuals may fail to make backups of local data, but the situation is improved not a wit if cloud service providers refuse to use the backups they have.