As already pointed out, the issue is not the ID card itself but rather the whacking big identity database underpinning it. As it happens I've held a simple ID card for my second country of citizenship for years and I have no problem with this.
The database aside, this all boils down to trust in the the Government. In my opinion the previous Labour Government had lost the plot and were rapidly becoming the "party of the jobsworth".
I could see the day under Labour where one would be routinely accosted while going about one's business by (police, PCSOs, council and Quango officials... [insert choice of jobsworth]) barking orders to the effect that you produce your ID card so they can "verify who you are".
Luckily the scheme has been scuttled for the time being. Should (God forbid) there there be another terrorist outrage then I'm sure it will be wheeled out again.
The terrorism argument is interesting, Spain have ID cards and yet they had a major terrorist atrocity in Madrid. The ID card does allow you to identify the bombers a bit easier after they have blown themselves up I suppose. It also doesn't stop people visiting from abroad to commit atrocities, they don't get ID cards.