As for your paranoia, I can somewhat understand if you have so much info tied to that one account. My issues with using Google heavily are more concerns with having all my data out there somewhere, uncontrollable by me both in terms of what is done with it, and also how I access it. As I've voiced elsewhere, the downside to Web apps is losing control of when upgrades happen. I am forced into their new version, complete with new UI tweaks and all, instead of being able to upgrade and learn the new features when I want to.
All valid reasons for rolling your own when it comes to this stuff. I just don't want to bother, so I find Google to be the best product of its kind. Security will always be a concern, but when it comes to the fear of them changing something in a way I don't like, fortunately Google has a very healthy philosophy of "not only is there another option for each of our products, but we let you get your data out of most/all of it." Basically, I like
this.
*edit*
As for the Google Reader stuff, that's all true as well, though as I said, I think it tends to reveal more of how that statement of "the best browsing experience ever" has some caveats to it. I can't argue about the way you interact with the device, but the fact remains that there are things I can't do when browsing the web on the iPad (or any tablet, I'd say). I could get around these things, but it seems like I'll need to do it with alternatives.
In Google Reader's case, I'd say that I'll have to wait for Google to release the equivalent to its iPad-optimized GMail app. I've played with that, and it's actually very good!
As for the Nexus One, the page loads, but is completely scrollable and just a static page. I can click on links and open different feeds, but I can't scroll the story area at all (two-finger scrolling doesn't work).