The major difference between cloud computing (SaaS, PaaS, IaaS) and server hosting provider (like 1and1) is simply virtualization.
With virtualization, software is decoupled from hardware. If software is decoupled from hardware, you can move your software and apps around without loss of data (or is it?)
With physicalization, your software sits directly on top of hardware. If the hardware goes bust, you are toasted. Unless of course you prepare yourself with disaster recovery procedures. In terms of performance, performance is better with physicalization than virtualization since software runs atop hardware; with virtualization, there is a layer of abstraction on top of the hardware. With virtualization, as a rule-of-thumb, you trade high-performance over high-availability.
High performance vs high-availability are always at odds with each other.
IT, like in life, is not an either/or proposition. Context is of utmost importance over zealots who don’t know how to apply virtualization or physicalization when and where it really matters.