I use cloud services where they make sense for my needs. I'm judicious about them and tend to choose locally installed solutions whenever possible, but there are some things that "cloud" (I still hate the term) services enable that are too useful for me to pass up. Things like off-site backup, access-anywhere-email with a good web-based UI, persistent calendar, social networking, etc. There are locally-based options for all of these things, but they're less convenient or ubiquitous, generally speaking.
I think the important point for me is that I use but don't inherently *trust* the "cloud". I backup all my cloud data in various ways (it's surprisingly easy to do in most cases). For cloud backup, it's not my only backup source, just the one I use for off-site redundancy. My local backup is still "primary". Many people in this thread seem to be calling out these services for their lack of accountability, being dangerous to rely on, etc. That's true of most solutions though, even the ones you setup yourself. You're "accountable" to yourself, but it's not going to help you in the case of a massive backup/data failure.
Cloud services are just another piece of the puzzle for me and I think that's the only sensible way to treat them. Don't fear them, don't vilify them, use them sensibly and to your advantage. If you're concerned about privacy in general, or actually do have some genuinely sensitive info, then think twice before putting it up there, and if you do, encrypt it. But don't *not* use something that would be useful for you just because you have to encrypt data to do so. Encrypting your data, if you have real privacy/security concerns, is something you should probably be doing on your local machine anyway, and doing so to take advantage of cloud services is just as legitimate.
The bottom line for me is the utility provided by some of these services can be very high, and I'm comfortable using them knowing I don't solely rely on them and would not be screwed without them. I would be inconvenienced if, say, Gmail went away tomorrow, but I'd still have all my email and could easily move it to my ISP's IMAP service, or most any other system. I think this is a pretty healthy way to relate to any service, not just cloud services: use what works for you, keep your options open, don't compromise your requirements, but don't overlook a useful solution on principle either.