A coworker was kind enough to loan me Joel on Software, a collection of writings by the guy who keeps a blog by the same name. If you're a developer, it makes for very interesting reading... if not, it makes for a very nice paperweight.
In one of the articles, Joel worries over the influx of web applications, since it means a departure from locally installed, rich client applications. He worries that too many developers are trying to webify everything, and it is going to lead to lower quality applications.
I'm of the opinion that the rich client app isn't really going anywhere anytime soon (and Microsoft is banking on this).. the tools the average joe uses to connect to the net are simply not secure enough or fast enough to do things like word processing with any degree of reliability, and people are always going to want certain things kept locally on their desktops. Joel may be correct in his generalization about developer mentality, but the market tends to weed out those things which just don't work very well.
My top 3 favorite free web tools (not counting Blogger):
1) Gmail - If you're a business owner and need to have complex control over inbound and outbound email, this isn't going to work for you. But if you're the average email user, you absolutely cannot beat Gmail. The interface is exceedingly slick (like you'd expect from the clever folks at Google), and it completely changed the way I read and keep track of email. Gmail doesn't really do anything new: conversation threads, labels instead of folders... these are all things that have been done before. But they are all implemented so well that I abandoned by Yahoo account mere minutes after fooling with Gmail.
The common thread in all these apps is that they're simple. An application doesn't have to be fancy to be good... in fact, the best ones do one thing and do it exceedingly well. Gmail is by far the most complex and robust (every now and again I still learn a new keyboard shortcut), but in the end they're all cool because they're so darned simple.