It's a good solution for more than one reason. It also helps you avoid vendor lock-in, prevents from getting stuck with services that get gradually dumbed down in their pursuit of growth at the cost of actual usefulness, and most imporantly, shields you from losing something you depend on because the startup running the service finally got their exit.
It really depends on what sort of tracking you're most concerned about though. If you're concerned about facebook or similar having your pictures and messages then a solution like this is a good option. Yes, your provider knows it's you, but unless they've invested serious effort backdooring your hardware, they can't tell what you send over SSL'd connections, they can't tell what people visiting that page are seeing and by and large, and most importantly, they don't care, they see no profit from that.
Exactly. It should be well-known that "If you are not paying for the product, you are the product.".