I am also weary of moving into "the cloud". I started researching this option as I began drafting the proposal for the future of our App Dev Environment. At first it seemed promising, since within our organization App Dev is essentially departmental, where as Database and Server Administration is primarily centralized within the IT Infrastructure.

This creates conflicting interests, resulting in IT getting pulled in 10 different directions, and having to provide a piecemeal offering to everyone, which falls short of the desired solution without fail.

SaaS/PaaS seemed to offer a way around this headache, allowing Departmental App Dev to get a "dedicated" dev environment that would in theory meet the needs of the department "to spec". However, in researching the cost, the limitations, the restrictions, etc... that would be placed upon developing in this environment, it just didn't make sense to pursue that.

From the perspective of virtualization and rapid growth/rapid development, I like the idea of Saas/PaaS. However, at this point I think the next logical step is more the direction of an internal Virtual Server environment. I can only hope that responsiveness and flexibility of the IT DBA/Server Admins is greatly increased through the use of a more flexible/scalable VM implementation.