Edit: The promise of cloud hosting is to be highly dynamic and let you scale up or down at a moment's notice. In order to achieve that, there are tradeoffs. It's silly to live with the cons if you don't need the pros. Each tool for it's own job.
Have you tried maintaining some infrastructure over a decade? I did. And I sincerely don't know, which way is better.
There are tradeoffs. Physical hardware doesn't change underneath you, but can fail, require expensive maintenance itself and reliable infrastructure around it (colo). Hosting providers tend to phase out services or even go out of business completely. PaaS limits you, providers change the APIs all the time.
Having been a EC2 user since its announcement and first open beta, I'm actually more and more inclined to think that it IS mature enough to be considered. I'm pretty sure that if I'd try, I can find an AMI from 2007 and it would run perfectly well.
On the other hand from costs perspective, reserved instances are not that expensive, and, unlike regular hosting providers, costs pretty much guarantied to go down, in the long term.
I would actually argue that much of high performance computing (which benefits hugely from advanced processor instructions like AVX and SSE) is just as fit if not more fit for cloud computing than a web backend. Much of HPC is for simulation related work which tends to be ad-hoc and bursty and generally speaking, is more horizontally distributable than web services (i.e. double the # of machines and simulation will run twice as fast). Thus a pool of shared resources (read: the cloud) is far more efficient (thus cheaper) than individual companies maintaining silo'ed compute resources.
Edit: The promise of cloud hosting is to be highly dynamic and let you scale up or down at a moment's notice. In order to achieve that, there are tradeoffs. It's silly to live with the cons if you don't need the pros. Each tool for it's own job.