Roy Schestowitz (techrights.org) calls it "fog computing". The main issue is that the user loses any control over the apps that he is running. In other words, we´re back to the world of the central "computing center" and the "dumb terminals". Except that the terminals are not so dumb anymore and replaced by a web browser.
In other words... if I want I can continue using the 1998-developed Paint Shop Pro v5 on my home machine, which was developed for Pentium 1 based Windows 98 systems, but flies in today´s hardware (and serves my bitmap-editing needs just fine).
But you can´t keep running an old version of GMail. See the complaints about Google´s latest screw-up with the GMail user interface:
http://news.techeye.net/software/google-to-angry-gmail-users-we-know-better
In other words, with the cloud and "Software as a Service" (SAAS) you lose control of your software. That´s why I call Cloud Computing "the fine art of separating people from their software".
Using ¨cloud" services just for storage -and also "remote backup" is another thing. It´s about the only desirable use for the cloud IMHO. But then there´s the issue of limited upstream speeds on current´s (specially DSL and cable modem) broadband links.
Just my $0.02 of course FC -- During times of Universal Deceit, telling the truth becomes a revolutionary act - George Orwell