I think you aren't taking the security issue seriously enough. Yes, we put payroll into the cloud, ADP is one example. But ADP has had decades of security experience, and the penalties for failure are draconian when it comes to payroll, so I'm not terribly concerned. ADP can do it right because if they fail even once the resulting loss of trust will kill them as a company.
Salesforce.com is a disaster just waiting to happen. I don't trust them (or companies like them) because they are young, growing too fast, and frankly unproven. You want to be the first to wear unproven body armor in combat? 🙂 That was produced under impossible deadline pressure by folks that may not know all the ins and outs of armoring?
That's the equivalent of what you're doing when you put your data in the cloud. My company's data leaks out and somebody could end up dead in a botched robbery attempt. Personally, I don't want that on my conscious, thank you very much. I have enough sleepless nights worrying about insider attacks, I don't need the extra worry of 6 billion more insiders...
Quite aside from security there's also the access issue if somebody cuts a cable, as you pointed out. Distributing data across multiple service companies brings up the spectre of synchronization issues and compromising the Single Point Of Truth. I hadn't even considered the regulatory issues, not to mention data getting migrated across national borders with different privacy/security/government spying rules.
To come back to the security for a moment, what about tape backups of the *service company's* systems. Will they "go missing" so a bad guy has all the leisure he needs to break whatever encryption is in place? Will they even have encryption?
The cloud is way too immature for serious data storage. How many multi-billion dollar companies do we hear about that have data breaches? If TJ Maxx can't do it right what's the possibility Salesforce.com will? Or some competitor that has to beat Salesforce's rates?
The cloud is NOT ready for commodity database use yet. Probably never will be.