The issue of concern for Harvey thet he brings up is not solely one of iCloud. Any cloud based service has similar wording in their TOS and theoretical ability to be invasive with your data. That goes for Dropbox, Google Drive, Skydrive, etc. These user agreements have become the industry norm.
Taking it a step further, do you think your email is safe? Check out GMails TOS next time you get a chance or Yahoo's. If you want to use online services the you must accept this is out there. I don't like it, but its not going to change anytime soon.
If anything, the real danger is your ISP. How much of your data being sent down their pipes is encrypted? Likely a lot less then anyone would be comfortable thinking about.
Edited by Jr Mouse - 10/30/12 at 7:05am