Chrome OS still has some problems to solve, but that's to be expected for software that hasn't even been officially released. Google Cloud Print will mature, there will be more support for peripherals (though vendors will look toward cloud connectivity rather than OS-specific drivers if they have any sense), and support for offline storage will arrive. There's even likely to be support for local applications (through Google Native Client) and alternate browser emulation (though a plug-in that, reversing the proposition of Google Chrome Frame, puts Internet Explorer or Firefox inside Chrome).
Chrome's success will not make traditional computers disappear any more than Apple's iPad will. PCs will just be used in scenarios where local computing resources make more sense than network-based computing resources. These use-cases include high-end gaming, high-performance storage and computation, and sophisticated content creation through applications like Maya and Photoshop. Buying a $2,000 cutting-edge computer to handle word processing and e-mail will become more and more unappealing when netbooks and other lightweight options are available, are just as functional, and are easier to maintain.
Even so, count on Google finding ways to make many of the more demanding computing tasks work in the cloud over time. Developers, for example, still mostly use local text editors and IDEs such as Eclipse rather than an online tools like Mozilla's Bespin. Expect Google to offer its own tools for cloud-based development.
Chrome OS, being simpler than Android, will be more secure. It will remain distinct from Android in 2011 and will start eating away at Microsoft's dominance in the workplace from below. The computer industry for years has sold businesses PCs that can be thought of as the equivalent of light trucks; many users, particularly at businesses, really just need something like a compact car. Google with Chrome OS will find that there's a market for something less powerful and less costly to operate.
Stallman's objection to software-as-a-service, restated in a recent Guardian article as an objection to Chrome OS, is the one that Google needs to consider and address more effectively. He worries that Chrome OS will encourage people to entrust their data to a third-party like Google, disempowering them in the process.
He put his objection to cloud computing thus in a previous essay on the subject: "The real meaning of 'cloud computing' is to suggest a devil-may-care approach towards your computing. It says, 'Don't ask questions, just trust every business without hesitation. Don't worry about who controls your computing or who holds your data. Don't check for a hook hidden inside our service before you swallow it.' In other words, 'Think like a sucker.' I prefer to avoid the term."
These concerns are exactly why Google built its infrastructure on open source software and commodity hardware: It didn't want to be subject to the whims of a specific vendor like Microsoft. Google wanted to control its destiny.
If Google really wants Chrome OS to be more than constrained computing for school kids or employees without any say in the matter, it needs to encourage legal reforms that recognize property rights in the cloud. Tenants in the cloud can be evicted far more easily than real world renters. Until life in the cloud is more secure, possession will continue to be nine-tenths of the law and those with any sense will maintain local servers, as least as a backup. Possession of data will remain a necessity for organizations and individuals that want actual rather than pretend control of their information.