I provide GIS-related services for local government and myself use a third party for hosting. There are a number of firms that specialize in hosting GIS services. The one I use is in California and is very good with both the open source and ESRI applications. The people in my organization who truly understand this stuff all give these guys two thumbs up and tell me that the cost and aggravation saved by using them in lieu of going to back to running our own is absolutely extraordinary. While I have not tracked the costs very closely, my anecdotal sense is that everything is better with the third party: up time, cost, security, updates, DBA, and the occasional call or email from them with a suggestion or reminder. If anyone wants their name, I would happy to provide it.