> I am baffled at how people continue using such a service for something as important as e-mail in 2012
It's free and works PERFECTLY 99.9%+ of the time, for 99.9%+ of users. The edge case (being shut off) can be easily worked around by having backups and changing your MX records to some other email provider ifwhen you find yourself without service from Google.
This risk is acceptable when weighed against "worst-case is 24 hours of no email while I switch providers", and even that probably won't happen. If it does happen to you, it's just a small temporary inconvenience with no lasting effect.
"Shit happens, always have regular tested backups (gmail or otherwise)" negates any potential data loss.