The problem with a VPS is that, unless set up very strictly -- if you get slashdotted, you're screwing over the rest of the people on your VPS. The impact is bigger, and (given enough complaint) could get your hosting company very angry at you for upsetting the other customers.
With a dedicated server, we're only screwing over ourselves when we get insane bursts of traffic. We are in a little sandbox of happiness.
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