It All Depends on the User and The Service and the Provider
Um, for a number of business applications termainla computing works extremely well, and also for public service applications like homework, taxes, etc. e.g. Where people (most) don't create but complete forms other design or get data others have input - a pre structured dialogue. The few power users who understand what they are using will need smart terminals capable of local processing, but not the mass of no technical users who just access a service in a bewildering tech world imposed on them by arrogant techies. They need a connected Play Station for Grown Up Apps.
How you construct a cloud is totally dependent on your applications, it could be all Intranet/extranet on private infrastructure to run ERP/SCM say, or broad public/consumer access to hosted servers - which may be publicly available but come with a level a of security most MNC data centres would love to have.
etc. The totally opinionated views of the hard of thinking tech bigots above are well exposed by the more considered objective replies, its horses for courses, but the lack of understanding of what most people need from pervasive computing services (to access a service) is indicative of the reason PC technology is still inaccessible to the majority of people and we don't have computing for the rest of us from well integrated consumer devices - sealed boxes that look after themselves. It doesn't suit the techies who have run the IBM architecture PC based industry to date. See:
www.eurochannel.org/blogs/The_Next_PC/The_Next_PC.html
For one I made a few years ago. Coming one day...
Brian Catt