I think the uncomfortable part is that bill's (and my) experience suggests that people are even more risk-averse than logarithmic functions would indicate.

I'd suggest that any consistent function (prospect theory notwithstanding) for human utility functions is somewhere between log(x) and log(log(x))... If I were given the option of a 50-50 chance of squaring my wealth and taking the square root, I would opt for the gamble.