A bit of both to be honest, I am only a small hosting compnay with about 120 customers to my name. I offer 100, 300 and 500Mb web hosting packages, but as of lately a few have been asking for reseller accounts or VPS solutions.
I currently use hostgator servers (reseller packages) but getting a bit to big for them so need to venture out a bit. Dedicated is the true solution, but would like to get into VPS first so that I can see whats involved and then offer VPS to my customers.
I have followed up most links on this thread, but to me, I don't think cost is an issue, its more support and reliability I am after.