Yes, this is a convenience argument, not a technical one. It's not that your PC doesn't have or could have more than enough storage -- it likely does -- it's that there are other factors that make you use Dropbox.

So now the question becomes: do we not believe that personal devices will ever become good enough to run a "good enough" LLM (technical barrier), or do we believe that other factors will make it seem less desirable to do so (social/financial/legal barrier)?

I think there's a very decent chance that the latter will be true, but the original argument was a technical one -- that good-enough LLMs will always require so much compute that you wouldn't want to run one locally even if you could.

If the personal computer of the 80s was good enough, why’s nobody still using one?

What people want to do changes with time, and therefore your PC XT will no longer hack it in the modern workplace, but the point is that from the point that a personal computer of any kind was good enough, people kept using personal computers. The parallel argument here would be that if there is a plateau where LLM improvement slows and converges with ability to run something good enough on consumer hardware, why would people not then just keep running those good enough models on their hardware? The models would get better with time, sure, but so would the hardware running them.