Shared is good for sites that are not of importance to you, I had couple of my clients on shared with hostgator and both sites got shut down cause of too much traffic... no email, no phone call just suspended! I took all my and my clients off their shared and migrated to my friends company who I had couple other accounts with...
Bottom line is that you get what you pay for... While VPS might sound like an ok idea, it also depends on how important is up time for you, and who you get your VPS service from... many companies oversell and while you'll be getting better results from that of VPS you still won't be getting what you might need.
My friend offers various hosting plans - has the cheaper ones too but they are limited to bandwidth - no unlimited as that just doesn't make sense. He has a reputable hosting facility in Ontario Canada which I have visited many times and with me having over 15 years of IT experience can assure you is great.
So I had a choice of having co-location - which I did for one of the companies where they are co-locating a crazy dual blade 72GB RAM, 16 x 2.8GHz Zeon's and 2 x 1GB Nics with lots of raided storage at a good rate.
Second i took one of the cloud accounts - see this link to their reason why Cloud is better from VPS:
http://www.colosseum.com/product_service...ud_vps.php
I have the Cloud VPDC4 (
http://www.colosseum.com/product_service...ckages.php) which gives me 4 Cores, 4GB ram and 150GB space for $265 a month. Not cheap, but cheaper from going dedicated and for sure much more reliable as the network consist of crazy configuration ensuring that almost everything is redounded. So far my downtime was 0, only time the server goes down is when i reboot it or work on it - and even that would not be required if I configured the servers differently...
One thing I will say is that storage space is NOT CHEAP - the hardware required to run it and software licenses are crazy! He talked to me about the number cause I too was asking why so little storage but after talking about the costs he has to cover I understand why it is so and why extra storage is not cheap...
With that being said if you'll be needing tons of space, you might go with combination of cloud and co-located or vps server but that will lead to degraded performance
I spent lots of time testing routes to the network from many different locations to make sure the network is fast and accessible as quickly as possible (number of hops and time).
Now I am not suggesting that you go out there and blow $250 a month, what I am saying is that at the end of the day you need to find a balance point and see what is feasible for you and if the extra $50 is worth making sure that your site is fast and has minimum downtime.
Talk to the company you're going to host with and find out what the limit is for connections - server load at which they'll shut down your site... See if they'll notify you ahead of time or not at all... And remember if a deal seems to good to be true - it probably is