Denial may be a problem for some, but that isn't the only reason for holding out.
The cloud is, in the majority of cases, not ready for prime time.
If six sigma reliabilty 99.99997% could be provided from ISP's and cloud providers ... maybe.
But the continued failings of cloud providers, even for stupid things like not updating security certificates, is preventing mass adoption.
Also, the trust issue is a large one, and the data security is a large problem. Who has access to your data? What guarantee do you have that your data will be there tomorrow?
With the FBI pissing all over international boundaries and shutting down a service that they had no legal right to shut down, and companies going out of business for legal/financial reasons, how do you get your data back.
I'm sure many people have wiped a phone and forgotten to get a few pictures off it first, or they've had HDD's break down and a few bits of data, files, movies, photos, lost.
Now with cloud storage, people are being coaxed to put ALL their data online.
No matter how many times you call the "off-line storage" people "flat earthers", it's not going to persuade them otherwise, because their fears ARE justified, and repeatedly so.
At the end of the day, anything less than an off-line backup in addition to the cloud storage is not going to be enough.
If it doesn't exist in two places, it doesn't exist.