Cloud Pricing is ridiculous ... made the comparison between a dedicated server and cloud offerings of microsoft, google, amazon ... rackspace (SO EXPENSIVE) and you pay 5 times in the cloud for the same.
While undeniably true, you have to look at the levels of redundancy. With a dedicated server, if the box dies you're offline, if the storage dies you may lose data, etc. Plus, there's also a premium just for access to the ecosystem/APIs. You are often paying for the theoretical convenience of being able to spawn additional instances programmatically.
And you can use both at the same time (dynamically scale up through cloud, bare metal predictable workloads)