... which works great until you have a hardware failure. Or until you have to add yet more servers to cope with even heavier use and you then have to redistribute the m users that were distributed over n server over the now (n+p) servers.

A distributed approach may well be a good idea, but once you start to distribute, you have to consider what should happen if one of the machines falls down.

True evil is doing something evil while at the same time feeling bad about it, because you know it's wrong, and still go ahead and do it.