Something has to give somewhere....
I work for an ISP, not FastHosts but a small one .. lets just say north of watford.
The thing most people tend to forget, is that theres a hell of a lot of costs associated with WebHosting you never see, especially if you do things properly.
1) If your outside of London/Leeds/Manchester/Glasgow ... Bandwidth is stupidly expensive. Multiply this by however many peers you need + add the Cisco costs for routers and proper BGP peering. You don't oversubscribe bandwidth.
2) Datacentre's cost lots of pennies. No matter how green you make them, especially if you connect them with speedy connectivity to one another. (ie: 10Gig, Dark Fibre....)
3) If you're doing things properly then you host on decent branded hardware, such as Dell of HP, you then don't oversubscribe boxes and either have SAS/SCSI local disks or iscsi/fc SAN's attached to the back. For things like database servers you cluster by default.
4) You monitor and break/fix them 24x7 and have on-site spares ready to go.
5) Your techie support staff are trained in Cisco, Manufacturer, OS and Storage technologies and understand software development, so that you never reply with the imortal line ..: "server is fine its your code" without explaining why to the customer.
Add those together and you`ll get nowhere near FastHosts.
The simple fact is, if you want cheap hosting, corners will be cut whether these are obvious (such as offshoring) or not. You pays your money and you takes your chances.