Is the Cloud overrated?
I think not.
OK, there is little point in trying to apply the "pre cloud" applications and products into a cloud context. Isn't that what has been happening up until now? Not exactly ideal.
But there are new kinds of applications that is built for "the cloud" from the start, and then it suddenly makes more sense. Google Wave is a new tool with great potential for communication, collaboration, document authoring, etc. Very simple to use, yet extremely powerful, and its usefulness will only grow thanks to its third party API. Why struggle in keeping a local storage of MP3's, copy them between various devices, etc, when it's enough to have a play-list at Spotify? The same with movies, use Voddler!
So yes, with the new kind of applications that are coming now and in the future, "the cloud" will come natural and not something you as a consumer will even reflect upon.