Convenience vs. security - the dilemma becomes personal

I've written before about how Larry Cuban's differentiation between problems and dilemmas has been useful to me in thinking about how to deal with conflicts in schools. My emphasis has been on how competing values, each valid, between groups like techs and teachers can cause dilemmas in dealing with security issues.
But the dilemma of balancing security and convenience is becoming an increasingly personal one for most of us. While this has been on my radar screen for quite a while, some responses to last week's post Could You Live in the Cloud? reminded me just what a hot and confusing topic online privacy and security can be.
When I wrote that I would be experimenting with a move to a cloud-based comptuing environment, using web-based applications and storage, several readers thought I was nuts:
Steve wrote:
I'm not that interested in the cloud...mostly because of ownership issues. If it's on my system, I'm responsible for it and keeping it private, safe and available. If it's on Google's or Microsoft's systems, who's responsible for it? Not that these companies would let my data out in the public, but who can be sure?
Peter adds:
You didn't mention privacy issues. Some "cloud computing" is fine, but some should be avoided. I find the trend for schools to shift their email and office work to the cloud irresponsible.
Lazygal agrees:
...what happens when that 3rd party abuses your privacy? Worse, what if they go out of business/get sold to another company? Giving up too much control over our information and intellectual property can be a dangerous thing.
and Libby worries specicially about Google:
I'm just not 100% sure we should smooth the way for Google's world take-over. Yes, this is an overstatement, and yes, I use Gmail and GoogleDocs and plain old Google because they work so well. But I'm not willing to trust them completely. (There has certainly been concern raised about Google's mission to know everything about everybody.)
My guess is (and I could be completely wrong) the same folks who are concerned about storing their e-mail and documents with Google have online bank accounts, access their children's grades online, and put embarrassing photos and/or stories on their Facebook pages. They order from Amazon, Netflix and Travelocity and appreciate the "recommendations" these sites make based on past purchases or searches. When their districts use ASPs (remote application server providers) for data mining, web-hosting or even student information systems, there are few eyebrows raised. These ASPs are, after all, responsible companies.
Most of us will need to find a personal level of comfort in balancing privacy and security with convenience and access. I find it impossible to say another person is a fool based on how much or how little he/she puts online. I tend to have a high level of trust in online sites, having used them now for many years without a (known) problem. But if others choose to be more cautious, so be it. They may certainly turn out to be the wise ones.
I do, however, hope we base our decisions and help others base their choices about online use on facts, not speculative "what-if" scenarios. I have not heard of any major problems with either data or privacy loss by users of GoogleDocs or Zoho or live@edu. My experience to date shows that GoogleDocs is far more reliable than any personal computer I've used.
"You have my trust until you abuse it." I work that way with people.
Why not with websites?