Cloud vs. Physical
I'm in the process of moving to the cloud.
The database layer of Seashell already runs off the cloud. It was a seamless, downtime-less transition. I will be moving the application layer to the cloud soon. Then I'll do the same for Peashoot. The applications will be run from Rackspace Cloud Servers. The databases from FathomDB.
Naturally I ran some tests before making this decision. The usual type of load, latency etc tests. I've posted some apache benchmark results below, comparing my physical server to a similarly-specced cloud server. What's important is not the absolute numbers (the benchmark was initiated from a server in Japan) but relative. Moving to the cloud will have zero impact on the end user.
Therefore, moving to the cloud is a simple financial decision. I can halve costs without impacting user experience. That's before factoring in other benefits like being able to scale faster and more cheaply. I've been running a physical server for a year now, which in bootstrapped startup language means I've been leaving money on the table that whole time.
You live and learn :)
If you make web apps or run a website, please vote - Cloud or Physical?
UPDATE: Both the application and database layer of Seashell are now on the cloud!
UPDATE 2: Peashoot and Seashell are now both fully running on the cloud!

