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Keen words Craig. I think I agree with you on most points. We too often get caught up in the hype of a new technology or new way of doing things. That doesn`t always transcend over into the realm of reality.
Our basic human tendency is for ownership and possession. Towards that end people are by nature going to be concerned about personal ownership. While we might store pictures at sites like Kodak, Facebook, LinkedIn, and others, they are still going want to keep a personal copy of that data on a personal hard disk someplace. Just in case.
So as a supplemental tool? Yes, cloud computing. But, pardon the pun, "to throw the baby out with the bath water"; that is not likely going to be the answer, to upgrade costs and hardware costs, and etc.