I agree with you completely. This has to be one of the dumbest business models out there. (Now that I've said that, look for the Mint IPO, Quarter 2, 2009.)
as to the whole security issue -- is anyone scared about making online purchases these days, like they used to be a few years ago? mint is as trustworthy as anyone else in the online finances business: http://mint.com/safe.html
I've seen environments from the inside out where credit card and social security data was treated like a joke (HIPAA be damned). The weakest link in any environment isn't the hacker path, it's the disgruntled employee. When it comes to my bank data, the less eyeballs in the mix, the better.