With I/O being the top bottleneck in modern databases and web applications, a lot of what people call "unpredictable performance" or "virtualization overhead" has mostly to do with sharing (and thin provisioning) storage devices between multiple servers/nodes.

I think there would be a huge market for a performance-oriented VPS provider who could provide each node with its own, dedicated hard drives/SSDs. All major virtualisation tech (KVM/Xen) already supports raw disk mode.

Obviously, space and SATA ports inside servers are an expensive commodity with off-the-shelf hardware, so this project would require at least some custom hardware to offer competitive pricing. I think the tiny mPCIE SSDs sometimes found in laptops would be a good area to explore.