Pros/Cons of switching from Exchange to GMail

We are a medium-large non-profit company, with around 1000 staff and volunteers, and have been using MS Exchange (currently 2003) for our mail system for years.

I recently attended a Google conference where they were positing that "Cloud computing is the way of the future", and encouraging us to switch from doing our own email with Exchange, to using GMail and Google Apps for everything.

Additionally, one of our departments has been pushing from inside to do this transition within their own department, if not throughout the entire organization.

I can definitely see some benefits – such as:

1. Archive space – we never seem to have the space our users want, and of course, the more we get, the more we have to back up
2. OS Agnostic – Exchange is definitely built for windows, and with mac and linux users on the rise, these users increasingly demand better tools / support. Google offers this.
3. Better archiving – potential of e-discovery, that doesn't exist in a practical way with our current setup.
4. Switching would relieve us of a fair bit of server administration, give more options to our end users, and free up the server resources we are now using for Exchange.
5. Our IT department wants to be perceived as providing up-to-date solutions to technical problems, and this change would definitely provide such an image.
6. Google's infrastructure is obviously much more robust than ours, and they employ some of the world's best security and network experts.

However, there are also some serious drawbacks:

1. We would be essentially outsourcing one of our mission-critical systems to a 3rd party
2. The switch would inevitably involve Google Apps and perhaps more as well. That means we would have a-lot more at the mercy of a single (potentially weak) password. (is there a way to make this more secure using a password plus physical key of some sort??)
3. Our data would not remain under our roof – or even in our country (Canada). This obviously has plusses on the Disaster Recovery side, but I think there are potential negatives on the legal side.
4. I can't imagine that somebody as large as Google would be as responsive as we would want with regard to non-critical issues such as tracing missing emails, etc. (not sure how much access we would have to basic mail logs – for instance)

Can anyone help me evaluate this decision?

• What issues am I overlooking?
• What experiences have you had with this transition (or the opposite – gmail to Exchange)
• Can you add to the points I have already outlined?