Can web applications be trusted?

ChrisMounce writes: A few days ago, Roberto De Almeida blogged about no longer using Google Notebook. He stopped because of his growing uneasiness with using Google's web-based applications, an uneasiness aggravated by Google sending cease-and-desist letters to a guy who had posted the now-well-known HD-DVD key in his Notebook (the guy's blog is down, but ironically, there's a Google cache of the post Roberto links to). My question is, can (and should) we trust web applications? Google's services are quite convenient, but how paranoid should we be about having a corporation store our data? Have there been similar events this, and have any involved services where people desire more privacy, such as web-based email?