It should be pointed out (yet again) that saying the fraud/theft involved $500 million worth of bitcoins is rather meaningless, since it presumes to value every single lost/stolen bitcoin as worth the last trade price... whereas of course such a large amount of bitcoins could not have been sold at market value without significantly crashing that market value before even a small proportion had been sold.
And, as drrussellshane didn't quite say loudly enough,
if you aren't the sole holder of your own bitcoin (private keys) then you don't own any.
Being your own bank has its ups and downs buddy. Having all your money in your house which could:
A. Burn down.
B. Be robbed. If you had a lot of
BTC then you might see family held hostage for ransom.
C. Your toddlers could destroy paper wallets worth thousands experimenting with the shredder.
D. Always being leery about using your computer with the QT funds for internet surfing.
E. Using Hive, or Multibit? Then read, new virus steals either wallet. Then running home from work to move all funds. Lotsa worry.
It could be a bit of a hassle, generating/hiding all these paper wallets, usb backups, updating them all with every change.
Don't keep all the copies of your keys in your house. Keep them offline. Make backups and encrypt them. There are ways of planning for all the issues you've raised. As for the ransom bit, I would suggest not letting on to people that you have a lot of bitcoin - that's the beauty of it, you could have 1000 20BTC accounts and no one in the world knows.