Yeah, I can see that for decent-sized operations. I've actually been looking at cloud services (EC2 and Azure) lately in order to gather telemetry data from beta software, in order to help with the design and refinement process. We're such a small operation that there's no way we could or should do dedicated servers, nor would it be economical. I can actually rent the smallest server for less than $15 a month with continuous operation, and proportionally less than that if I'm only turning it on part-time, like during development and testing. Best of all, as the need arrives, I can simply scale up as needed. Both Microsoft and Amazon's offerings are roughly on par regarding pricing and services.
For all the idiocy about the cloud bandwagon and people using it inappropriately, the ability to rent and dynamically scale virtual servers on demand is actually really handy in many cases.