But what people forget is: AWS has a world class team of engineers first fixing the problem, and second making sure it will never happen again. Same with Heroku, EngineYard, etc.
Host stuff on dedicated boxes racked up somewhere and you will not go down with everyone else. But my dedicated boxes on ServerBeach go down for the same reasons: hard drive failure, power outages, hurricanes, etc. And I don't have anyone to help me bring them back up, nor the interest or capacity to build out redundant services myself.
My Heroku apps are down, but I can rest easy knowing that they will bring them back up with out an action on my part.
The cloud might not be perfect but the baseline is already very good and should only get better. All without you changing your business applications. Economy of scale is what the cloud is about.