If you’ve been wondering about the security and privacy of Google Apps, this security whitepaper may answer many of your questions: http://www.google.com/a/help/intl/en/admins/pdf/ds_gsa_apps_whitepaper_0207.pdf
Additionally, I just came across an interesting announcement from the Google Apps team. It appears that Google Apps for Government version has just received Federal Information Security Management Act (FISMA) certification and accreditation from the U.S. General Services Administration. You can read the official post here: http://googleblog.blogspot.com/2010/07/introducing-google-apps-for-government.html
Last September, federal CIO Vivek Kundra argued that the US government cannot continue to invest in its own data centers and so plans to set up its own federal cloud computing services ( see: Apps.gov). At the same time, Google announced plans to make a government cloud to provide government agencies with access to Google services such as Google Apps (see: Google for Government). Currently the District of Columbia is using Google Apps and the city of Los Angeles decided last December to migrate all its users to Google Apps (see: Los Angeles Goes Google).
For the latest on government cloud computing trends, see: Federal Cloud Blog
University Business reports that Yale has slowed its Google Apps project. Reports are that it is being slowed down in order to fully understand the privacy and security issues that attend shifting from a locally hosted mail system to a cloud based mail system. It also sounds like they needed to do more in terms of involving the community in the decision-making process.
Also of interest are the comments by the Yale community at http://www.yaledailynews.com/news/university-news/2010/03/30/its-delays-switch-gmail-community-input/comments/