Dedicated (rented) offers similar performance improvements and cost reductions without the extreme upfront cost (obviously costing more over its lifetime as a result). But these days it really seems like a blind spot. Maybe it's just that I never completely jumped on the cloud bandwagon (or was running servers far before it got rolling), but I really haven't found a generic use case for cloud hosting. Planning infrastructure upgrades isn't rocket science; you'll have more than 10 minutes' notice to get a new machine. There are certainly many specific use cases for cloud hosting, but as a generic hosting tier I find it incredibly overused—and companies waste money and are forced to deal with unreliable performance (EBS i/o anyone?!) as a result.
GoGrid lets you mix and match dedicated and cloud servers, which offers the performance and value of a baseline of dedicated, and the flexibility of the cloud. I find it to be unparalleled.
Softlayer (my preferred dedicated host for years) does this as well. I agree that it's currently impossible to beat the combination of bare metal performance and cost efficiency with the ability to spin up cloud servers within one's own VLAN.
