Having supported friends and family's home and small business computers for years, I'll go on record saying "in the cloud" is better than storing it locally for most of them.
- I'm pretty confident Google is doing a better job securing their data in the cloud than many home users and small businesses do securing their local PC's from trojans and other malware.
- I'm pretty sure Google is doing more frequent and reliable backups than many home users and small businesses.
Now I would never condone a business putting customer or sensitive company data on Google's cloud without a business contract with Google, and I would have friends and family avoid storing their taxes or other critical personal info in the cloud or on their personal computer, but for documents, pictures, etc. the cloud is probably a much better place for most home users.