This post has some discussion on scaling problems that PG is having with news.arc and with continuations (on news.ycombinator.com). It's worth checking out and is relevant to both the future of arc and PG's current mind set when it comes to arc's web programming model.
I was surprised to find no responses from the core group of arc forum contributors.
I like the "It's hard to beat closures for elegance" argument, but I haven't really tried the arc way for web apps yet. It's also true that over time we see higher-level languages win out over their lower-level counterparts despite initial objections about performance. So it might be that closures win eventually over initial objections about scalability. But I like readable urls, http://example.com/a?fn=fkg34lk doesn't really tell me anything.