In my opinion…

Well, that summarizes my thoughts quite well. Online storage / backup providers are especially hit by problems recently but others can have problems too, even “big names” like Google had privacy issues with Google docs recently.

So should you avoid SaaS all together ?

Well … even if online SaaS services have some risks associated with them doesn’t mean you’re safer with just your local application on your laptop or a local server on your PME network.
In this particular case, from a data integrity point of view, hard drives in a air-conditionned datacenter are safer than a single external HDD on your desk … For backups, the best option is probably not to rely on a single layer but have both local and remote backups. For more complex services, make sure you have exit solutions in case you need to. And if you become really dependent to a service, check
what SLA you can get and also what happens if that SLA is broken.

Ultimately the choice is yours to take …