This is why I aim for a setup where I can throw my computer out the window and not lose any data at all. My phone is currently set up this way--if it gets lost or stolen, all I need to do is connect a new one to my computer and all my contacts, calendars, and configurations will be set up as if I had never lost my phone at all.
So what is "the cloud" anyway? Googling "cloud computing" yields many definitions but the basic idea is simply using the internet to store information, as opposed to using a physical location like a hard drive on your computer or a USB flash drive.
One main concern with storing information in the cloud is that by definition, you are putting information in someone else's hands. One of my favorite examples is Gmail, Google's popular web-based email software. Google stores all of its users information on their servers so that users can access all of their emails and contacts from different computers and mobile phones.
If Google started invading, distributing, or deleting personal user data, there would be a mass exodus of users faster than you can say "goodbye Google," creating what I believe is a natural incentive to protect user data.
- Related Follow-Up Post: Stop, Drop(and)box