Tony, if you have VPS'es out there you better go re-read the agreement on what get backed up and how... Most VPS hosting providers do not backup data for the customers. The ones that do, you pay for it one way or another. Either it's built in to the cost, or it's an option.

The provider should be blasted... but not for the reason you chose. The lack of adequate redundancy on storage in a virtualized environment is outrageous. But if the subject cared about his data, he should have also been asking about server specs before putting his data out there.

And yes you can back up a virtualized server directly. Just as you'd back up a non-virtualized server. And in some methods, it is more efficient. We chose to instead use an snapshot'ed image system. We sequentially put each vm filesystem in snapshot, and create an image from it. But as any dba can tell you this does not guarantee your database will not be corrupted. We strongly recommend that customers also run their own backups, and especially databases. We don't guarantee backups, but work hard to protect data (mainly because my medical IT background where data loss is unacceptable).