I guess my original thought was more along the lines of MS Office vs. "cloud".
You really have to separate the issues of cloud from the issue of the applications themselves. If you want/need MS Office type features, then google apps is not an option, having nothing to do with cloud. The applications themselves (word processing, spreadsheets, etc) are very different. To go google apps, you have to accept a more limited scope of features and functionality in the applications (although the google apps also have unique features that MS Office does not)
But liking MS Office (and/or Exchange) doesn't mean you have to do it locally and reject cloud. Microsoft is coming out with a suite of cloud services that will be designed/advertised to be the best of both worlds -- the MS apps you know and love, with the advantages of the cloud (whether they pull this off successfully remains to be seen however.) Also, you can use google just as a storage place. I keep all my MS Office docs in google cloud.
Personally, I use both daily and extensively and see pros and cons to each. MS Word and Excel have lots of useful and needed features, but Word is so bloated and poorly designed that I hate using it (but must every day.) On the other hand, the simplicity and ease of use of google apps and the fact that it's in the cloud is a real joy. It's almost like I don't even store documents anyone. I have virtually no files on any of my 3 daily use computers (home, office, laptop) -- everything is instantly available from anywhere there is a browser, including my other device -- a phone.
There is no doubt cloud is here to stay and not a fad. The days of running your own machines for routine stuff like office productivity apps and document storage are numbered. Whether people continue to do this for three years or five years is a question, but no one will be doing it 7-10 years from now. But where and how they'll be doing it is a question.
I'll largely sidestep the issues of security and of trusting your data in the cloud and/or to the stewardship of the vendors (MS, google) because that issue gets political and even quasi "religious" with people. I will say however that I work in IT in a medium-sized corporate environment ($30M, 200 IT staff) and we have closely examined the services and security of google over the last couple years and we have generally reached the conclusion that they can provide equal or greater degree of reliability and security than we can, and they can do it less expensively than we can due to the efficiencies they have from their enormous scale. We didn't look at MS, but I am certain that many businesses will reach the same conclusion with MS cloud services.