How much of a problem is ransomware?

I hear stories about ransomware, where malware essentially takes over a computer and the victim is given a short amount of time to pay hundreds of dollars, or lose everything on the machine. However, I’ve never actually seen it nor do I know anyone that has every experienced a ransomware attack. Is it a real thing, or more of an apocryphal story.

Story added 3. January 2014, content source with full text you can find at link above.