Sound like wise words there dude, tinfoil-hat level paranoia is a term i like lol.... yes I agree - the current state of bitcoin, and hell the human race in relation to bitcoin as well - both require such a level of paranoia at the moment, hopefully this will change in time.
It just makes me sad to see how many people trust some website with all their bitcoins. Even if a website is trustworthy, we have seen plenty of them get hacked.
Security is the number-one concern of the dev team, so I am confident that someday people will be able to keep them on their PC safely, but there is still a lot of work to be done before we get there.
In the meantime, be paranoid.
Thanks for the advice, I think with what has happened over the past year especially I keep my coins in my own local wallet. If I need to do a transaction I'll do so with the idea of not leaving any extra coins on a site longer than needed, and only to sites that have a decent reputation. I figure any site potentially can be attacked, last thing I'd want is my coins going with it because I was lazy and left them there unnecessarily.