Hi Mate,
I am actually a *nix system designer / engineer and we do cloud offerings both in house for our own server infrastructure and for customers.
In general your average cloud solution will have better redundancy then a stand alone server for two reasons 1 you have multiple hosts (cpu power) so that if one fails it should not bring the cloud down. 2. commercial san's are used which use higher fault tolerant disks in larger raid arrays with better raid controller and types which in general means less likely to fail in a standard raid 1 array or raid 5 array. (TOUCH WOOD)! But and i can't stress this enough you need backup's of some description if you keep this locally or your cloud provider has a seperate storage device for this the choice is yours but you do still need backup's. In most companies t+c's you will find they will not be held responsable or liable for lost data.
Performance wise for you basic stuff you won't notice a huge amount of drop off locally but there will be some latency issues as for example you are connecting via adsl back to the cloud provider (this will get worse if you use anything hosted in the US) as things have to do a round trip.
For web / email etc you will notice an improvement then hosting this at home for example and if your users are spread out wide they will all see a performance gain. As far as general performance of the Hardware you should find it about equal to running it naivtely for basic websites some e-mail accounts etc.
i could go on all day so if you have any other questions just ask.
Do i recommend it ?
Yes i moved my home *nix server doing web/ email stuff to a cheap VPS i just keep a backup and it's prob worked out just as cheap with the crazy price of power these days!
