The shifting sand of "free" hosted Web services

I stumbled on the "lifestream" blog of Cory O'Brien today. Being a fan of "lifestreams" (an aggregation of 'actions' taken on various sites) myself, I was interested to find that Cory's site was running on an lifestream aggregation platform called Sweet Cron, which was new to me. Sweet Cron is an open-source PHP-based application developed by "yongfook."

The developer, however, has since moved his own lifestream/blog to the free service called Posterous. Posterous, like Tumblr makes blogging easy, which is great. However, Posterous, like Tumblr, also has a very opaque business plan. Call me cynical: but I can't get my head around relying on "free" hosted Web services for more than transient projects. (I'm even starting to question my own previous musings about a "Software pyramid for a healthy non-profit".)

From the recent purchase of EtherPad by Google -- leaving even their paid customers in the lurch -- to the quiet shut down of free service TwitApps, it seems that hosted services -- paid or not -- can be volatile ground these days. There's a long list of web services that have joined the "dead pool" over the last few years -- I know that I've been bitten more than once (Stikipad, Ma.gnolia, etc.)

If you've read Free by Wired magazine editor Chris Anderson, you'll know that most of these services aren't free by any means; they are simply going for the largest market possible to make it feasible for 5% of users to pay the freight for the other 95%. If they can't reach the mass market necessary to succeed, troubling times lay ahead for the service's users.

Enough of these free services have shut down that I've started moving toward installed software again for my own personal needs. After enough wasted time looking for half-baked free services, I've found it becomes worthwhile to invest in running the service myself on my own infrastructure. Your mileage may vary of course.

All that said, I'm sincerely curious about what others are doing: Are you relying more-and-more on free services like Posterous and Tumblr? Do you think about the day of reckoning when, inevitability, they introduce a premium plan, sell your data, or show ads on your site? Do you back up your data regularly, or just have faith that all will be okay? Or, alternately, are you starting to dust off your old programming books and getting to work on your own solutions?