So how I see it, I'll get a Netbook running a flavor of Linux.

This computer can work offline using Google Gears, however because it is based primarily for online usage, I won't be able to run any crazy 3D renderings. Probably I'll need to pay (google) for hosting more then x gigs in the cloud.

So basically instead of having a computer that I own, I'll have a computer that (basically) doesn't have a hard drive. but I still need to have a file system so I can upload my photo into Photoshop Online's editor. So Google gives me a HDD that has a bunch of symbolic links to the cloud, all programs are on the cloud. Then, lets say that your internet is fast enough to connect to the cloud at a reasonable speed without lag.

A web OS needs a file system, which means that Google is going to have to provide (lets say) 4 gigs of cloud drive space. So even something like Photoshop would work, and since Adobe already plans to have an online version of Photoshop (they released a simple version well over a year ago), it's not unbelievable that Google could develop a really simple OS with an improved layout, that would make things simpler for most people. Then there are some programs that are more complex, but just because an OS is designed to be really simple does not mean that more complex software can't run on it. You really don't even need a complex OS like OS X or Windows to do these basic tasks, which is what's funny about OSes getting more complex and feature-filled. There are a lot of people in the world who only do a few things with a computer, even in today's world:

Google chrome operating systems