Actually not. I started using 1Password and I must say it increased both, security and convenience. No temptation to reuse the same (and simple) password, easy login ("Fill and login") and password generator with which I generated absurdly complex passwords I am using now. And I don't even have to remember them!
That would be a single point of failure for your entire online life, it would seem. I've actually got no idea how one would assess where that sat on the trade-off spectrum.
What would you consider a failure? I use 1Password + Dropbox, so in effect my passwords database is backed on three computers and iPhone.
That's one additional benefit: new logins and passwords are synced.
