I'm on route to eliminating my local storage. I've started by organising all my personal stuff in 1 folder, creating aliases to these folders on the other places in the OS where I'd like the stuff to be (like on the desktop). Next step would I guess be to sign up with one of the online storage providers, and start syncing that important folder.
I'm also starting to take notes to understand when I use locally based apps, and the 1 big advantage I've seen so far is (naturally) speed. Using a local app to edit a web page (html) or an image is still much faster than loading up a web-based app, especially if it's not an ajax/web2.0-app, using multiple pages for each process. It remains to be seen, but I personally believe that the network will be fast enough in a few years time to compete with local apps. So using ajax-like techniques the user should not really notice if he's online or not.
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