The issue with that, Turk, is that it is an on-site backup. If your house burns down, or your computer equipment is stolen, you're toast.
We do both on site and off-site backups. A reasonable way to do it, Rod, assuming your servers are co-located, is have your colo servers back up your local machine, and have your local machine back up your colo servers.
That way if catastrophe strikes either site, you have backups.
Online backup sites are a mixed bag. Yes, they work. No, they shouldn't be your sole line of defense unless your backed up data isn't critical to you. It isn't likely that the key would become corrupt... more likely is that they might have some kind of data failure themselves, or the encrypted data becomes corrupt.