EDIT: it turns out that the OVH deal isn't so wonderful. That's if you commit to a term. The month to month price is more expensive than advertised.

First, Slicehost hasn't changed their prices since they opened up shop over three years ago. Hardware costs have come down a lot since then so their margins are growing fat.

Second, that provider that you mentioned happens to be the best deal on the list.

Third, if you read their information on it, you see things like "Unusable due to very high and unpredictable storage access latency." Specifically stating that latency "sits at around 90ms." and that peak speed is 8MB/sec. That's one of the OVH offerings. The one you specifically mention seems sketchy: they will only sell to you if you have a mailing address within their area. So, no US sales at all and if you live outside of Ireland, you have to use their site for your country. Odd at best.

Fourth, Slicehost has RAID to protect from hardware failure and these servers usually just have one drive which means a hardware failure means restoring from a backup with downtime.

Fifth, OpenVZ isn't the same as a Xen host and, apparently, can easily be oversold ala shared hosting. Many of the good deals there are OpenVZ VPSs.

Most of the others aren't such amazing deals. A 768MB server with a Celeron for $40 isn't such a bargain today. I mean, clearly it's a good deal, but not amazing when compared to what's out there in the VPS space. And they do link to lowendbox.com which has VPSs cheaper than Slicehost/Linode. And just like this site, those VPS providers aren't the cream of the crop like Slicehost and Linode.

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Really, there are VPS providers that are nice and cheap now-a-days. I'm currently using ChunkHost which has a free beta program for a 512MB VPS which costs $19 (about half the price of Slicehost and $37 for 1GB and $66 for 2GB). I'm sure there are more that I don't have experience with. Slicehost is now the Rackspace of VPSs (literally) and charges prices accordingly. It isn't a terrible deal.

It'll be hard for low-end dedicated servers to compete with VPSs because of the cost of rackspace and power. I mean, if you have a 5 year old Pentium 4 box that you want to repurpose as a server (and a lot of low-end dedicated hosts used to do this with desktop hardware), you're talking about using 150 watts or more and 4U of rackspace for one customer. Compare that to getting a SuperMicro twin 1U and putting 2 quad core 32GB servers in 1U and yes, probably using more power, but not 64x more power - probably in the range of 5x more power - and you can see how it just can't compete.

I mean, now you have at least 10 servers in 1U using half the power and 1/40th the space. At best, you now have 64 servers each using less than a tenth the power and 1/256th the space.

Really, the site even says it: "So why on earth would a person want such a crappy dedicated server? In most cases you don't - go get a Virtual Private Server instead." There are a few reasons to get a dedicated box which they note, but not a ton.

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On the high-end dedicated side, dedicated boxes still look pretty good because VPS providers want high margins. SoftLayer will sell me a box loaded with RAM and bandwidth for a lot cheaper than most VPS providers will. But that's on the high end. And there's little reason for VPS providers to want larger clients. Why would you give a volume discount? If 16 people are willing to pay $40/mo for 512MB, why sell 8GB for less than $320/mo? Clearly there are some billing efficiencies and support efficiencies to justify a slightly lower price, but RAM is RAM and doesn't cost less if you slice it up less.

So, that's the real position for dedicated boxes in this economy: when you're going to be using the majority of a VPS box. Otherwise, the power and space efficiencies of VPSs usually win out.