My sites are hosted on virtual machines on physical clustered hardware. I pay for a certain spec of virtualized machine. When I need more power, I pay more and the virtual machine automagically turns into something more powerful. I don't mind that there are a bazillion virtual machines running on the underlying hardware, because I have a performance guarantee on the virtual devices. I can separate the processing from the bandwidth, which has helped me reduce costs tremendously. As well as doing my own backups at the file level, the entire virtual machine is snapshotted from time to time, "time to time" being good enough for my needs. If I wanted to pay a lot more, I could go for virtual failover to physical hardware in a different location. Virtualization works very well for me.