It’s a matter of personal opinion, but no doubt the savers of Cyprus will feel aggrieved. However, it's interesting to look at the way banks work, and how this affects savers when banks are subjected to economic pressure.
A bank deposit is simply a loan note from you to the bank, so if the bank goes down so does your loan note and your money is gone!
When a bank goes bust, the bank's owners (the equity owners) are the first to lose. Then the depositors lose (and any other debt holders of the bank) if the bank's assets are less than its liabilities. In the first ten months of 1930 744 banks failed in the in the US leaving savers high and dry.
Therefore banks are not safe places to put money (unless any government guarantee covers your deposit, then you have to trust the government instead!).
When you put your money in the bank, you are loaning it to them to do with as they wish, there is no guarantee that they will give it back to you. You have no control of what they decide to invest in, loan out or pay to the staff. Some countries such as the UK guarantee a certain level of deposit and, in that case, it is safer.
So, if you deposit in a bank which isn't government-guaranteed, well-run and aggressively capitalised, then you are at risk of losing your money. Choosing a well-run, sensible bank that pays a sustainable level of interest is a good way to offset this risk.
Cyprus Banks and The EU
However I do think the EU forcing Cyprus to raise capital from the savers/account holders is risky for the sake of 6 billion euros which is small change in the scheme of the EU debt problems.
It sends the message to depositors that their money isn't safe which may lead to runs in many banks across the weaker nations of the EU. They have gone to great lengths to avoid bank runs over the last three years, and this move seems to undermine it. Unless you stop the bank run queue immediately it will only ever get longer.
Update 25 March 2013
The discussion prior to the final recovery agreement in Cyprus shows that even if a government guarantees deposits the guarantee is only good if the country doesn't need bailing out too!
