I use a Linode 512 to do web development, run automated tasks (Twitter updates, website production), and keep current on new technologies. It has hosted application servers including Openfire XMPP, NGINX, Redmine, and I'd read of others hosting Asterix and many others. Its a server that doesn't go down due to local power or internet outages. Although the Linode team provides top notch support, I really haven't had to use it. The tools are great and the service just works!

If I'm not mistaken, CMU has a small endowment for a University of its size and stature (Just over $1 Billion), you'll find it trailing many universities . That said, I believe CMU does receive more than its share of grant, research funds and donations (Tepper, Gates, etc...) for buildings, etc...