Computer locally or centrally?

I am consulting for a company that has a difficult decision to make... continue using Microsoft applications and operating systems, or migrate to Linux and use server based applications. In this case we are evaluating Google Apps.

We are finding that a majority of the company's employees user their computers mostly (solely?) for word processing, spreadsheets, e-mail, and instant messenger. Certainly these users could use a Linux machine instead of a Windows-based machine.

Having centralized applications and documents has the advantage of being accessible anywhere. Still there is the fear of storing sensitive information on someone else's server.

When a decision is made, I will post a follow-up.