Google has recently released in limited beta a SDK/App Engine/Framework called the Google App Engine, to which you can develop web based applications using the same infrastructure that software like GMail, Google Calendar, and the other Google Apps have been created on, and then host them on the Google servers... their SDK/API is pre-built to handle scaling and heavy traffic loads (up to 5M pageviews/mo with a free account) and increasing storage needs (500mb on free account)... also they give direct access to Google mail API, Google file storage, Google "Datastore" (their db system) and plan on taping into others like calendar... Also, you can use your own custom domain names to point to your apps... Finally, Google is allowing you to use their authentication system for authenticating your users! No more asking users to create yet another login for yet another web application!
Now I'm not saying this is better than hosting your own server, but it is pretty stink'en cool!
One downside is that it currently supports only Python... I might be learning a new programming language! =)