The provider pool that offers a mix of both (and has proper integration between cloud and hardware network) is pretty limited.
Their cloud offerings (without managed support) are pretty reasonable priced in terms of $/bang. This is my opinion.
> reliability and scalability is mostly a software issue
Your software is not going to save you if your network is cheaply build and maintained. Your auto-scaling setup will not do anything if your provider is having network degradation issues.
I never said the Rackspace is the only choice, but it's one of the better choices when you look at the big picture.
Especially if you require actual hardware to be part of your infrastructure.
I have been Softlayer customer for 4 years (when they first started, during EV1 days). Their network and support is superb. I also recommend them to people who want to take the hardware route.
I did not mention them in my post because I have never played around with their cloud offerings.
They were a bit late to the game and I have already invested into integration with other cloud providers (API, etc).
Cheers.