I rely more on the cloud as each day passes. GMail is my preferred email interface. Evernote houses most of my notes and web clippings. MyPhone keeps critical data backed up on my Windows Mobile phone. The cloud is awesome when it works, but when it is down, you may be temporarily cut off from your data. In the case of some Palm Pre users, when the cloud went down, it wiped their Pre's memory causing data loss.Blogger James Kendrick posted at jkOnTheRun that his Palm Pre became a brick after the cloud was down at its routine 2:00am sync. Instead of just having some sort of "unable to connect" error, the phone did a hard reset, or wiped the memory. James isn't alone. He linked to a thread on PreCentral.net where, at last count, over 90 posts have been made by users that had the same thing happen or helpful souls offering advice on potential ways to get some of the data back.
I've seen some irritating issues with the cloud. Evernote recently released an upgrade to their Windows product and a number of users, myself included, were unable to sync our notes for over 48 hours. No data was lost however. Several years ago, users of Microsoft Money were locked out of their file if they had linked their data to their Windows Live account. Service was restored in a few days though. Again, no data was lost, but it was a frustrating experience.
To have a cloud failure though cause your remote copy of data to wink out of existence though is unthinkable. As I said, I sync my phone every day to the beta of Microsoft's MyPhone service. A number of times I have been unable to connect. It is a beta after all. I only get an error message though that the backup failed. My phone wasn't even slightly tempted to hard reset itself.
The cloud can be awesome when it is working. Worst case when it is down though is you should only be denied access to your data until it comes back up. Palm needs to figure out what has happened and make some substantial changes to their infrastructure and maybe even WebOS itself to have a number of fail safes that prevent data loss. Until then, some Pre users might be a bit nervous for a while when they reach for their device first thing in the morning.