Municipal bond funds - is the risk worth the little reward?

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4. What I've seen tells me that the safest investment right now...

...is (very) short-term treasuries--nothing longer than 1-year maturities; I'd look for mutual funds with portfolio durations of 3-6 months, heavy on 90-day T-bills and money-market instruments. Caveat is, with such short durations, yield will be very low, so they won't produce a lot of income; but principal will be fairly safe. If you're looking for income, the only place I see it is in the junk-bond market, where, of course, the risk is off the charts. Truth be told, I'm tempted to put most of my money into a savings account for the rest of this year--at least it'll be insured.
Of course, I'm not an investment advisor, so take me with a big grain of salt.