After some research[others], I've found that most security-related arguments against cloud computing qualitatively fall into one of the following risks, in no particular order:
- Context-hopping. A compromise of one virtual environment may facilitate access to another virtual environment. This is a technical risk.
- Supervisory control. A compromise in a virtual environment may lead to an "escape" from that environment to the supervisory process that controls it and other environments. Together with #1, these are also called "VM Escapes." This is a technical risk.
- Inferential data loss. Others could make inferences about your environment by inspecting their own (resources available, etc.). This is a technical risk.
- Change management. Virtual environments can be changed rapidly, meaning a possible loss of control. This is a procedural risk.
- Role confusion. Virtual environments, being controlled by different actors at different layers, may lead to confusion about important task execution (think: backups). This is a procedural risk.
- Forensics. Virtual environments may complicate or limit forensic investigations and e-discovery. This is a technical risk.
- *Control. In outsourced situations, loss of control of the underlying hardware and supervisory process externalizes certain risk-introducing actions like misconfigurations. It also may inhibit validation of controls at lower levels of the software or hardware, and outsiders have administrative access to the underlying environment. This is an implementation risk.
- *Data location. In a virtual environment, the location of data at any given point is uncertain, with possible legal or export control implications. This is an implementation risk.
- *Privacy. In outsourced scenarios, another entity dictates the conditions and depth of law enforcement cooperation. This is an implementation risk.
- *Continuity. Hosting infrastructure on a company's servers could be at risk if the company folds or experiences other stability issues. This is an implementation risk.
Let's focus on those risks that impact all implementations of cloud computing; that is, items 1-6. To be blunt, the only risk that deserves special attention is  Forensics, because of the loss of the often-invaluable unallocated space on a disk or in memory. Every single one of the technical risks - are already accepted by organizations at the network layer: this includes VLANs, MPLS tagging, and other network abstractions we have been using for years. I've yet to hear an argument as to why we should treat virtualization on the host any differently than we do on the network for these risks. Procedural risks  and  already exist in production environments, and should already be managed by established processes and organizational responsibility. If these are issues for cloud computing, they're issues for the broader IT organization. If nothing, they are not unique nor limited to the cloud.
Looking at the other half of our risks, again we see risks either already accepted or not specific to cloud computing, with the exception of privacy and possibly data location. Organizations that have this concern, however, can easily work with their provider to manage the privacy risk, and I'm not convinced that the data location issue is a problem - after all, packets are routinely routed around the world irrespective of the export status of their content. In any case, it's likely that this is easily addressed as well.  and  are already an accepted risk at the network layer by any organization with a WAN managed by an ISP.
In contrast, I'm going to provide a few reasons cloud computing could actually help security, if properly implemented.
- Intrusion detection. The supervisory process is a place where all network and host activity can be monitored from a single vantage point. This holds great promise for intrusion detection and behavioral analysis by exposing far more data than could be afforded previously.
- Compliance monitoring. User activity could easily be monitored across multiple systems and applications. Restrictions on where data resides could similarly be implemented across systems easily (think: DRM).
- Availability (yes, it is a security concern). Redundancy and rapid recovery become far more affordable.
I find it appropriate that the iconic security object is a firewall, because this is how most security professionals think. Classic InfoSec mindset is as a gateway; a veto-holding non-voting member of the IT community. The correct role, in my opinion, is as an active participant in technical innovation, architecture, and the engineering process, making sure requirements are met in a way that balances risk with cost - not eliminating risk at extraordinary cost. Compliance and auditing are my key suspects in holding us back from this goal, but that's an argument I'll save for another day.
- C|Net - Risks outweigh rewards according to most professionals: http://news.cnet.com/8301-1001_3-20001921-92.html
- Lenny Zeltser's blog: http://blog.zeltser.com/post/1525310925/top-ten-cloud-security-risks
- Infoworld, quoting Gartner: http://www.infoworld.com/d/security-central/gartner-seven-cloud-computing-security-risks-853
- NYTimes Op-Ed by Johnathan Zittrain: http://www.nytimes.com/2009/07/20/opinion/20zittrain.html?_r=1