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That's a great question.   Cloud computing covers a lot of areas.  At a top level, cloud computing is an approach to IT where many users (potentially even from different companies) get access to shared computing resources, rather than each having their own dedicated servers.  This offers many advantages including lower costs and getting up and running quickly. 

Cloud computing is not a function of Windows 7.  It's a approach to deploying IT systems where many users have access to share computing resources such as software applications, servers, storage etc.  It is used to deliver IT at a lower cost and more flexibly.

There have been a number of high profile incidents recently where some of the largest cloud providers have had outages and some even lost data.  This underscores the fact that, if you have important data, it is important to build in backup, security and disaster recovery capabilities.  This could be on your own site or at another cloud provider.

Internet based software applications, such as flickr, are definitely one type of "cloud" (known in the industry as SaaS or software-as-a-service).  Another type of "cloud" is the private cloud, where IT departments in companies, will share computer resources across many applications and employees.

As some of the recent data breaches and outages have shown, IT/IS risk is an important component of the overall enterprise risk.  Many companies today are using tools to explicitly assess their IT risk across a number of dimensions - technology, people and processes - and then feed this IT risk assessment into their overall enterprise management work. 

Amazon does recommend encrypting data before it is moved into their AWS cloud. The advantage is that a company or individual maintains control over their encryption keys – and thus the access to their data. This does however require additional effort on companies using AWS resources ; encryption products like PGP help solve this problem.

Cloud computing is good for consumers because it means that they will be able to access more and more capabilities directly from websites online , rather than having to buy software and install the software on their computers at home.  For example, for years people had to buy tax preparation software like TurboTax and install it at home.  Today Intuit (the company that makes TurboTax) also provides this capability as a "cloud offering" on their website, and consumers can use it without having to install anything at home.   

I am supportive of efforts like FedRAMP -- The Federal Risk and Authorization Management Program or FedRAMP and it has the potential to help the commercial sector too.

Data security in the cloud is a critical concern for any individual or company looking to take advantage of cloud applications or storage. Encryption is the most important technology used to protect data stored in the cloud. Many cloud storage platforms provide some encryption as part of their solution. Companies looking to get more control over their data often encrypt the data before it’s moved to the cloud – especially any data that is considered sensitive.

Data security in the cloud is a critical concern for any individual or company looking to take advantage of cloud applications or storage. Encryption is the most important technology used to protect data stored in the cloud. Many cloud storage platforms provide some encryption as part of their solution. Companies looking to get more control over their data often encrypt the data before it’s moved to the cloud – especially any data that is considered sensitive.