There is need for online wallet services. The problem is improper implementation. VPS, colocation and so on are bad. If You have no physical control over hardware, you have no real control over it. Linode with backdoor access, MtGox with audit login leak and so on. Learn to assemble server hardware and then put the server software on it.

I learned not to trust online wallets even pocket change. Instawallet teached that to me.