If there are a significant number of pruned nodes on the network will it impact network security? The size of the Bitcoin blockchain is reaching 350 MB and adding more than 60GB per year. I feel verification node centralization a risk if the cost of storage does not drop.
My question 1:
Is using pruned nodes as good as full nodes?

I think a pruned node will have the same UTXOs as a full node (with a full blockchain) and it should be able to verify all incoming transactions and blocks.
It will not be able to provide blocks to a requesting node if it does not have them in its blockchain. But as long as newer nodes have the hash of the previous block this should not be a problem.

My question 2:
If there are a significant number of pruned nodes on the network will it impact network security?
Is there something I am missing?
Your points 1 &amp; 2 are both correct. The good news is the only time those old blocks get requested is by new nodes that are still bootstrapping and downloading the blockchain for the first time. As long as those old blocks are available and accessible somewhere, those new nodes will sync up just fine.
Another fact about pruned nodes is they are required to store at least the most recent 288 blocks. So if your node has only been offline for a day, you can still sync up from a pruned peer.