I think that the data confidentiality concerns are very real. Cloud security is getting better every week as cloud providers are putting more layers of protection to increase data safety in the cloud. Unfortunately, layers of protections are less effective when it comes to data confidentiality. That math simply works against it: to compromise data safety each layer of protection must be compromised; to compromise data confidentiality it’s enough to compromise just the weakest one to leak the data (thus adding more layers doesn’t necessarily increase data confidentiality and may in fact decrease it).
The only technical solution to data confidentiality is to encrypt the data before it gets to the cloud to make sure that only you and / or the people that you personally know and trust have access to the key (I’m sure those guys in the cloud datacenter are nice guys, but I’m just not ready to share all my information with them, sorry).
There are solutions available today that provide solutions to data confidentiality by using encryption. If you want to use the cloud as a file share, Nasuni may be a good solution. If you want to use the cloud as MySQL database, OblakSoft ClouSE may be a good solution. Such solutions help to adopt the cloud one-step-at-a-time and see what it’s like.