I do realize there are benefits to thin clients, just not when there's many applications or medium to heavy resource usage involved.
1. No argument was made about where data is stored. It's all about processing power. Your new server will have to be able to process the same amount of data as the group of desktops you had before.
2. Server side scripting does the major of computing in certain applications. Any sort of graphic-intensive workload is not possible. Say for instance, any modern game requires so much graphics processing that you would need one crazy server to render the environment. If you're processing a lot of high resolution images like those in medical imaging, you may run into problems. Embedded videos like those on youtube and such can cause a dramatic slow down as well.
3. No USB can be a big negative. Especially considering how many people use document scanners (ScanSnap). This would essentially render them useless. Anything that requires specific drivers can't be used. A lot of practices still burn patient charts/files so that no CD thing can be a negative as well.
4. If anything happens to that server, your entire operation is down. At least if something happens to a regular server, the local applications are still there. Just because it's all on one server doesn't mean those issues with software will disappear. Honestly, how often is it the hardware at the local workstation vs what the person did on the workstation? Those issues with Office and other applications will still persist. Furthermore, if person A opens an email (with a virus) or a downloads a a virus on the terminal server, no matter how impenetrable you make it from the outside, the entire server and every user is compromised.
5. I can name about 500 other companies that use workstations. Most of them in the Fortune 500

. That reservation system involves a proprietary application, CMS. They are using thin clients for nothing else other than the management system. In a real office, people are bouncing between Microsoft Office, emails, SQL applications, browsers, videos, pictures, etc.