After all, if my own system is compromised, I just get a lot of hassle. If LastPass ever gets hacked and leaks their passwords, they lose their business overnight. That's pretty good motivation for them to keep on top of their stuff.
I used to use 1Passwd, which stored the passwords in a local file, and that could be said to be marginally more secure, except that it generally uses something like iCloud or Dropbox to sync the passwords, so there's still a single point of failure... The main reason I moved away from 1Password was that they gave me a shitty response when I asked them if they were going to support Chrome. I decided at that point that I didn't want to give them my money anymore, and so I didn't upgrade to 1Password 3.