It's been at least a year and a half since I used a desktop program for anything substantive except photo and video editing.
I was an early beta tester of Gmail, and have continued to use it ever since. I back it up onto my 320 GB USB hdd using Thunderbird, just for the sake of having it there -- no good reason, really, but there's plenty of room. Apart from the backup, I haven't used a desktop mail client in over three years.
I have backed up everything I've written on the Web (probably 800 columns for various sites over the years) onto Google Notebook. I now do virtually all of my writing in Google Documents, storing it on their servers to back up the servers on the posting site.
When I need to open a .ppt file, I do it in Firefox. It's safer, and I never want to keep the damned things anyway. It's always cute kittens or purple sunsets, it seems. If I want to create a .pdf, GDocs will do it for me. Same goes for other formats. The only complaint I have about Documents is it doesn't have margin control. That's not critical for the kind of thing I do 99% of the time, but I do keep Abiword around in case I need to format a formal letter. I have OpenOffice on the #1 drive if I have to get complicated with something, but I tend to forget it's there.
About the only thing I use the PC itself for on a regular basis, outside of being a vehicle for Firefox and Web applications is for photo editing. There are no competent online photo editors, and I doubt that there will be for a long, long time due to the extreme data crunching needed. I'd use Google for storing images, but I don't like their interface. I use SmugMug for serious display.
It's going to be a long time before I discard my PC (or the coming Mac) completely, because of the image and music editing (I know you can do it in Linux, but I'm 63 years old and don't want to bother), but as far as the other stuff is concerned, I might was well have a high-speed pipe, a simple OS, and a lot of RAM.
I used all the Zoho products, and they're great. Too slow on a dialup, however, which I have to use often enough to make it a problem. Takes 'em forever to load and react. Google's slow enough. If I ever solve that issue, I might give them a serious try. I also like the fact that my stuff is on (arguably) the biggest server farms in the world. If Google loses my stuff, we've got other problems too.
And no. I don't worry about security. There's no security on the Net anyway. If I want to be secure, I use strong encryption. So far, over the years, I've accumulated about 250 KB of encrypted data, so that gives you an idea of how much I worry about that stuff. Of course, others may have bigger things to worry about. I'm a pretty boring guy.
I also use Carbonite for backup. I could literally go to China, buy a new computer, and set up shop online. I'd miss a lot of my stuff, but nothing I use to make money.