On the face of it, I'm not at all averse to the iD card idea. However, when we look at it in more detail, we see that it is so fraught with potential problems that I really hope tha the government holds off on it at least for long enough that things might improve.
As you point out, no server database is totally immune, not just to identity theft, but to unreliability, data loss and good old user error. And yes, recent history does not bode well for a successful and seamless implementation.
All in all, real cause for concern.