Depending upon your provider, it can be trivial to transfer VMs from one host to another. So if you want more resources than the physical host has available, or there is a hardware failure you can be up and running again in minutes (and at the company I used to work for, we automatically did the transfer, so the customer didn't even need to get out of bed). Of course, you pay for that, both in performance and cost, but that's the decision you have to make.

Edit: overuse of the word "host"