your house burning down is the extreme case, but there is still good reason to have data off site... not stored away on cds somewhere in your home.
And for the record, CD and DVD are not the best types of media for backup... at all.
You could also password protect an archive and send it to your gmail account... "the man" won't have your files then.
The company I work for made off-site storage compulsory for all PCs (about 4000 in the building). Ever since this started, there have been nothing but complaints (regarding access speed, missing files) and people in my department have had data go missing.
My PC, being a pre-press machine escaped this punishment and in the 1 1/2 years I have had it, never had even the smallest problem. Backups are done every week on 2 DVD-RWs, which I've also had for 1 1/2 years.
As for CDs and DVDs not being good for storage? CDs are excellent. I have never had any issues with my backups (I still have all my CD backups from 1996). All you have to remember is that CDs are not invincible.
I'll agree on DVDs with you. I have had troubles with them in the past, but that is why important stuff goes on CDs only (or the back-up hard drive). All my pr0n goes on DVDs

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As for your password protection suggestion, I have a feeling 'the man' is more than capable of hacking software that is publicly available.
In conclusion (my fellow earth-people), I don't like relying on someone on another continent to store important data for me.