@robert trans: You're missing the point and still thinking in pre-cloud terms, I'm not saying Google Chrome is going to be a huge success (I'm not even sure Google thing it will be either, since this seems more like another experiment than some of their other endeavors like Android), but you're completely failing to understand what they're attempting with it.
A) There's definitely a large demographic of PC users that don't use anything on their computers apart from a web browser, or use a web browser 90% of the time and a few select applications like Skype or MSN. This demographic is going to grow as the web becomes more capable of providing the same applications that were previously only possible through software. I remember back when to use email, you had to have an email client installed on your PC since web based email didn't exist - now people downloading emails to their local machines via software like Outlook Express is the minority, and most users are happy to use services like Gmail, where their data is stored in the cloud. I daresay half the people in this thread that are so vehemently opposed to cloud storage are hypocritically using web based email accounts.
B) If all your software is run server side then there's no difference between a powerful laptop or a less capable one, as long as their both capable of running the Chrome OS. This is one of the main tenants of this approach to computing. You could even play high end games like Crysis on a pitifully specced netbook using services like OnLive. And Google aren't selling a one-size-fits-all "Google laptop" anyway, they're just allowing OEMs to install Chrome OS to their own hardware, same as with Android, so assuming the idea takes off, there would be a varied selection of machines to choose from anyway. Your point here is already moot really.
C) I think the general populace is far less concerned about data security in the cloud than enthusiasts are, for better or worse. email communication is probably the most sensitive data many people have, and like I said previously that's already on the cloud for the most part. People are also happy to store family photos on Flickr, home movies on YouTube, etc. I use a Drobo for my own data storage, but most people have all their files on a single hard drive which is massively more susceptible to data loss than a cloud service.
With regard to things like blu-ray... you are completely stuck in a dated mindset here, the whole idea behind cloud computing would mean you wouldn't be accessing data through optical media in the first place, you'd stream a movie from an online service, so again this is a moot point for the majority of people. People creating their own data like photographers, film makers, etc. will run into trouble here, but this isn't the kind of user Google is catering to here, those people will obviously need entirely different systems from the average user.
D) Your suggestion on how Google could be successful is totally unworkable and would amount to a poor attempt to ape Microsoft Windows, when Google are trying to do something completely different here. I wouldn't use something like Google Chrome, except as a third device after my desktop and laptop maybe, simply for convenient web browsing on something bigger than a phone. For many people however a Chrome OS powered laptop will fit their needs better than a Windows 7 machine, and if not now then probably in the future as the web becomes increasingly used as an application platform due HTML 5 and such, rather than just a means of displaying static pages.