Bruce Schneier, author and computer security expert, wrote a good reality-check essay on the subject of online privacy, or the lack thereof.
In it, he points out how using Webmail or an online document service like Google Docs not only allows for more easily snagging your information, but also severely waters down legal privacy protections. For example, he points out that "the courts have ruled that the police can search your data without a warrant, as long as others hold that data. If the police want to read the e-mail on your computer, they need a warrant; but they don't need one to read it from the backup tapes at your ISP."
Sobering stuff, and I agree wholeheartedly with Schneier's assertion that it's far past time for our legal system to develop a technology-aware approach towards privacy that doesn't use different standards for our personal information when it's on a home computer, as opposed to when it's on a Google server. It's all our data, and it's all getting more and more spread out.
I'm a huge fan of cloud-type services like Google Docs and Webmail in general, since they allow for anywhere-access and protect against data loss. But when you combine these privacy concerns with the recent spike in data breaches, and note the absence of any real penalty for companies that collect and then lose our data, it becomes clear that we have some catching up to do.