1. The race to the bottom in pricing has had two effects: it has turned hosting into a commodity, and customer service has suffered. As an immediate effect, you get customers who aren't loyal to you because they can pay the same or less somewhere else, and you anger more customers because you don't have the money to hire good staff.
2. Lack of technical ability on the customers' end. Everybody wants a website now, but not so many people understand all of the technology involved, so you end up with issues that are technically the customer's fault, but look to the customer like they're your fault. Worse still is that any attempt to explain the issue to the customer just comes across as unhelpful technical jargon. Service providers really need to take a default "We like all of our customers (even the pathological ones)" position, or they won't be able to cope with this.
3. Hosting is largely a dinosaur. VPS hosting is the biggest thing in the industry in a long time; during the race to the bottom, way too many hosting providers got complacent and stopped inventing new software and systems, and just crammed as many customers as they could onto their servers. Customers really resented that, and I've talked to so few hosting providers at any regional conferences that ever really got that.
All of these add up to what looks to customers like a business that just doesn't care, and customers are eager to give that attitude right back. The question that hosting providers should be asking themselves is, "What's to love about our service?"
I happen to agree with the general opinion that hosting providers are in such a position of responsibility that they can't really afford to make mistakes like this. Most (not all!) startups get a pass because it's accepted that they're a small team building a service; if you build your business on top of that, well, buyer beware. But, if you choose to be a hosting provider, you're taking on some serious responsibility. You're no longer a small team, you're a commodity service that web-facing business absolutely live and die on.