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But they can access your password, stored in plaintext http://news.ycombinator.com/item?id=3110634

Ouch. Well, based on that and other comments, this definitely does not look like an appealing replacement for dropbox.

I tend to think that if the information I'm backing up is sensitive it should either be backed up only to services I run or should be encrypted before it gets sent to any 3rd party service. I wouldn't trust any "we can't see your data or know your credentials" assurance from a relatively unknown (or most known) 3rd parties.

I agree completely, although I do take comfort in someone claiming they cannot access my data. I wouldn't store any confidential data there in any event, but at least if they are trying to design it so that even they cannot access that data, it seems there is a slightly lower chance of it being leaked to the internet.

Dropbox already had one case where you could log in without a password. That could never happen if they actually needed the password to decrypt the data.

If they encrypt they have the key and someone must have access to it so this cannot be 100% true, same as Dropbox etc.