Password managers only protect against certain kinds of attack. Many cloud services do not or can not properly encrypt their users' data, so having a strong password won't help in the event that your cloud provider's datacenter gets rooted.
And you can use stronger passwords (if the service permits), thus if they only lost the passwords datbased (assuming it's hashed) you are still safe.
Most providers don't erase disks properly. Takes too much time.
Logic. Win.
Of course there are limits to any measure of security, but 1password does a great job in helping people manage themselves.
Personally, it's helped me a lot in just keeping my various usernames/user accounts organized (I sign up for just about anything).