I don't know what it is about our society, but it seems that instilling fear and doubt into people about any advance in technology is in vogue. If you read the recent article published by the BBC, "Storm warning for cloud computing", written by Bill Thompson, you would get the idea that cloud computing is popular, but highly unreliable, insecure and makes all your actions visible to the US government. I have to disagree in several places with Bill. One of the sections of his article is subtitled "Constant Outages". I am not sure what types of IT infrastructure that Bill has worked with but I would venture to say that he must be used to a utopia that I have not been able to experience where there are no bad hard drives, old memory chips, power outages, the occasional bad router or network issue. Some of these reasons are why I would move my infrastructure to the cloud where keeping up with all of the intricacies of operating such large systems are the business of the vendors providing the service. I have been very impressed with Amazon's ability to respond to issues and I can say that we have only experienced about 1 hour of down time in the entire year and a half we have been sitting on the "cloud". That is a far cry from the "Constant Outages" that Bill mentions. He also brings up Twitter as an example here. I use Twitter, and I think it provides a fun service, but Twitter is NOT the cloud. Just because Twitter goes down constantly does not mean the cloud is unreliable, it means Twitter is unreliable. Blame Twitter's architecture, not cloud computing or the platform.
I would also disagree that the cloud is insecure. It is as secure as you want it to be. Choose wisely what you store in the cloud and what you run in the cloud. Encryption does work, contrary to what Bill would have you believe. You do not have to publish your private keys or even perform the encryption in the cloud. You can encrypt locally and store. Again, this comes down to design and architecture. Be smart about what you store and how you store it.
Finally on the issue of the Patriot Act and the US government knowing everything about your or your business... Are you a terrorist? The Patriot Act is designed to allow the US government to protect its citizens from terrorist activity. If there is not a reason for them to suspect terrorist activity or need the information for prosecution, then you should be ok. That being said, it still comes down to making informed decisions about who your cloud computing providers are. I am not going to be signing up with anyone having a data center in Iran, Syria or North Korea... Just seems like the smart move to me.