I think more people should be asking your question: "what is cloud computing?". Because, in my opinion, it's easy to hide behind the name "cloud" - hell the name itself implies obfuscation and mystery.
But the real answer is that the "cloud" just is an internet-facing datacenter housing services or data. The trustworthyness (is that a word?) of the cloud is really dependent on the provider of the cloud. Some clouds are more redundant, resilient, and secure than others. That's important to consider when you're evaluating a move to the cloud. You _need_ to know where the data lives & how it's being backed up / secured. The term "cloud" implies it, but doesn't ensure it.
The cloud is like the internet - you could think of it as one giant nebulous entity, but in reality it's a bunch of independently owned & run services. just like AOL != the internet, geocities != the cloud. But there is a relationship there.
To me, this story about the "cloud failure" is like having someone's local ISP have an outage, then cry about how the Internet isn't reliable.