Excellent points, dphillips, but cost isn't always the reason to do something. Web hosting companies are cheaper for some people, not others. They are also better run in some cases, not in others. Depends on who you are. Sometimes outsourcing for more money, and more convenience, and less investment risk, is worth it.

Cloud computing is vaporware now, and I think it will be for a few years, but VMs were like that as well. I've been VM'ing since 99, and it's come a long way.