Other Shortcomings
I think that there are major shortcoming in the current hosting model that are not addressed at all in this article, and are specifically relevant to Cloud computing (IaaS). For example, when I price out a dedicated server, 90% of the available systems do not have RAID redundancy for data storage, and even if they do, they are still subject to a single point of failure in the system itself because they run on a single server. To me IaaS is not about temporary or burst requirements (as nice as these features maybe) it is about redundancy in hardware...
If I have 100 servers clouding up my virtual host, instead of a single partitioned server, I've got hardware redundancy and a far greater assurance of up-time and reliability. This is the real crux that the Cloud solves, and is (almost) non-existent in the current hosting market. In other words if the Cloud can competitively price against a dedicated server, then it is more than competitive in the current hosting market, because of the real gains in redundancy and improved reliability.