To be fair, Atwood thought his hosting provider (CrystalTech) was backing up his system. As it turns out, their entire VM backup solution failed silently, so everyone thought the backups were being made. If anything, I'd say this is a sign not to work with CrystalTech.
If you fail to audit and test your disaster recovery procedures on a regular basis, then you fail at competently maintaining your infrastructure. No excuses.
You can't outsource liability.
If YOU are not testing YOUR backups. YOU fail.