There was a press release from a "Virtual Private Server" hosting company today:
Bodhost introduces Guaranteed 100% Uptime Fail-Over VPS Hosting.... A renowned Dedicated Server Hosting and Virtual Private Servers provider announced the launch of its new VPS Hosting offering "Guaranteed 100% Uptime Fail-Over VPS Hosting!". The Fail-over VPS plan is a fully managed solution which combines the flexibility of Virtual Hosting with the luxury of 100% uptime guarantee at the most economical price. [PR]
That's one way to try to Differentiate. I would say start offering Joomla. Offer hosting with a Joomla CMS platform. Why? So people can feed their social media - twitter, blogs, etc. on to their website (like I will be launching on my site by January).
More and more folks are turning to blogging - are you offering hosted Wordpress? More folks are using Twitter. People want convenience and they want help with getting all the back end to work. They will pay for that ... and more than $10 per month.