As for why it would be difficult to use and insecure? I'm guessing most of the people you hang out with are probably geeks. For perspective, take a look at this video:
https://www.youtube.com/watch?v=o4MwTvtyrUQ
Imagine each one of those people in the video has a personal data store that contains their complete medical history, right alongside all their Google searches, Amazon purchases and tweets.
How secure of a password do you think they picked?
How hard would it be to trick them with a phishing attack?
How much do you think they even know how to do with it in the first place?
Even though some people are confused about the difference between browsers and search-engines doesn't mean they don't know how to use either. You'd probably have got the same response if you'd asked about the difference between the Web and Internet. Or any other complex system they don't have deal with day-to-day (internal combustion engine, electricity transmission, etc)
[1] edit: think of things like mass-assignment issue with rails and github or the recent facebook exploit that was posted. Centralized services are just as much of a honey-pot as a personal cloud might be.
it would likely be difficult to use, insecure... Who says? How can you assume this?
and offer no clear benefits Some would consider the ability to keep your information private at will a benefit. Others would consider the ability to sell said information a benefit.
the lack of scale would make it even harder to do anything interesting Lack of scale? An individual's data would be controlled by that individual, but the system would scale across all of humanity. I don't think you're thinking big enough -- I'm not talking about each person running his personal EC2.