Nope, you are being paranoid! What sensitive documents do pupils and teachers create? Think about this: if Google cannot secure your info, what hope do you have? If Google can't keep viruses out of their system, how do you expect to? We use Google docs and Gmail in a school domain, which Google doesn't advertise to. I have a management console over their profiles that cost nothing. On the other hand, to temper what I've just said, we have internal admin departments which run MS Office on a generic MS network. Their data is internal and backed up daily, in the usual old-fashioned fashion. Google Drive is perfect for educational use, and relieves a huge IT admin burden from you shoulders.
And Office is expensive, over-engineered for educational use, and not as straightforward to implement like Google Docs. Office 365 basic is free to schools, but you can only read and edit existing docs. To edit them, you have to download it to your desktop installation of Office, or pay per pupil. And Gmail is WAAAY better and simpler to administer than Outlook.
@SYNACK, if you are afraid that your expertise may become irrelevant in a school, you'd better move into the IT industry. Schools should spend money on education, not overpriced, highly-specialised IT infrastructure and skills. If they smell a cost-effective solution, they will move to it. I am a private school IT Director. I have no qualms using whatever resources best service the needs of education. It is not self-sacrifice: I have a more than enough to fill up my day, and reducing the tedious grind of admin issues frees me up to do more constructive stuff.
Do remember that many schools (in the UK at least) have cripplingly slow and unreliable internet access, even in this day and age. In deepest, darkest Wales here we have secondaries tacked on to overstretched infrastructure with wet string. The primaries are using the electrical equivalent of semaphore.
Even with a reliable 100mbps connection to the WAN, our internet connection speed often dips down to below 2mbps. This should improve in the near future, but I will need a good long period of sustained speed and reliability before I choose to rely on any cloud based services for critical resources.
Also remember that just because a solution fits your school and situation, it may not suit others; especially state. Our infrastructure was neither overpriced nor specialised - we use industry standard services, education pricing, and long service-life equipment. I fully agree that school budgets should be spent on education (teachers and resources primarily) but we still fit into that machine.
I think Google apps are probably secure enough, but for us it would be a compromise in terms of features.
Under EES agreement all students get Office (proper) for free now. Teacher laptops for home use are already covered and if they want another copy for their own machine only £9.
Kids and staff alike are comfortable with Office and it is, whether you like it or not, the "standard" office suite. So I'll be sticking with it for the time being. :-)