I spent one of my Fridays last month sitting through a two-hour seminar on privacy in the cloud. Software Freedom Law Center's Eben Moglen was the guest speaker, and he raised many interesting points about cloud computing.
Moglen contends that the client/server architecture is just begging to be abused, and that cloud providers will always be one step ahead of efforts to protect people's privacy. He called for a peer-to-peer equivalent of Facebook that would work from a handheld device running open-source software.
Moglen believes that it is fundamentally important to return the Internet to the distributed architecture that it was envisioned to have in the first place. It will be an interesting effort to follow, but I am not optimistic that most people will be motivated or inclined to make the switch.