Definitely true. I've actually only been with this company five weeks as their Ops guy, so these are questions I need to get answers too - the founder freely admits Rackspace was his first choice due to good history. But AWS is probably a better fit for us, so I'm doing due diligence on all that. Dedicated is probably not going to work for us at least initially. But definitely worth investigation too.
You know you need it, so why pay a huggggeeeeeee premium and get relatively poor performance compared to dedicated for on demand VM services?
I get the impression a significantly smaller subset of people using AWS/Rackspace/Azure should actually be using them.
Obviously I know nothing about what you're doing, so it may be that you have a perfectly good use case.