I am in the comfortable situation of having an excellent provider where I have a reseller account. I am very comfortable about reselling their managed hosting with a reasonable profit margin. Even though things can always go wrong I much prefer to be in the position that I can really help my clients instead of having to refer them to a third-party support team.

Another thing that is really annoying that some webhosts don’t even support basic features such as the WordPress flash file upload. I much rather take care of the hosting than having to explain to the client why he cannot upload files in WordPress. In the end in their eyes it is always my fault anyway 🙂

I think the biggest issue here is that managing a VPN can be just as demanding as managing a dedicated server and most webdesigners underestimate this. I think it is best to let the pro’s take care of managing the servers, while reselling managed hosting is about providing added value to your clients.