The contents of your Dropbox folder are constantly kept up to date with their cloud servers and they have things backed up on their end so your data should be safe as long as it reaches the Dropbox servers.
The beauty of this is that should you mess up your local copy, you can always delete the folder and have Dropbox re-create it from what's in the cloud.
As far a privacy goes, it's a cloud storage that comes with it's own risk..the thing is only as secure as your password to access it is..there are enough people using the service with a fair amount of private stuff without any issues.
However, for really delicate thing you can take it a step further by password protecting files that are on dropbox (there are a few Mac apps that can do that for you). So not only should somehow have to break into your Dropbox account, they now also have to break into your file protection scheme to access the files themselves.
However, adding this extra layer of protection might make accessing the files from Windows, iOS devices impossible..
So, this is one of those things where you have to use your best judgement..