Client side encryption doesn't seem to fit with the ChromeOS concept. All your information is in your Google account, all your documents on Google Docs and none of it is encrypted as far as I know (Open to Correction). An engineer at Google could theoretically look at all your bookmarks, documents, browsing history etc. Add aggressive US "anti-terror" laws into the mix and it looks like ChromeOS is not a good choice for those looking for real privacy.
If the government wants to read your documents, it's just as easy for them to get a warrant to search your house as it is for them to get a warrant to compel Google to give them your docs.
Except, as we've seen with wiretapping and so many other data breaches, if it's 'just there' and can easily be indexed and searched with the click of a mouse, then it will be. Searching someones house requires proper channels to be followed. Looking at files on a PC is so much easier, can be done without the person knowing and is, imho, too great a temptation to resist. The emergence of laws in the US to make such access as easy and automated as possible proves this.
