Whether or not they have access to it depends on the service you use. Read any user agreement very carefully! One of the most popular cloud services, Dropbox, does indeed have a "back door" that allows employees to gain access "if needed." "If needed" is supposed to mean "because they received a subpoena," but who knows. That said, it is still a useful service and there's a fair bit of information I'm comfortable keeping there--typically data that is publicly available or meant to be shared. I would not put personal information there.

For benefits, yes, you can save hard drive space, but for me the primary benefit is that I work on multiple computers, and everything is automatically synced across machines.