I have two domains at ReadyHosting.com, the first one cost $100/yr. and the second was $50/yr. Ready Hosting has much better features and a faster connection than the host my client is using. My client's company has been using Mindspring/Earthlink hosting and paying $50/month! How can Ready Hosting provide better service for so much less money? I would like to switch my client's hosting provider to save him money, but I'm a bit skeptical that when he does so Ready Hosting may begin to show its cheapness. I have had excellent service from Ready Hosting so far, the only drawback I can see is that they do not offer 24/hr phone support like Mindspring does. My client would definitely rather spend more money for more reliable service, but Mindspring is lacking in many areas such as database and scripting languages capabilities. Uptime is probably his biggest concern, and if Ready Hosting is not up 99% of the time, I am sure he would rather spend 12 times the amount on a more reliable host.
One thing is certain: he can get better service and features for $50/month than he does with Mindspring. Mindspring is still using PHP3 and they don't even support SSI.

A large company like Earthlink can charge so much because they usually get customers who are already ISP customers so they figure they (the customer) can get hosting from the same company. Not to insult anyone, but usually such customers don't know much about hosting, don't have the time or the ability to research hosting companies and probably have simple hosting needs.

The service reliability strongly depends on NOC/server reliability.

The small companies have a major advantage compared to the big sharks: the flexibility in dealing with customers.

The phone support however is not always present but I can say that a 12 hours max in resolving technical problems is usually sufficient for a decent quality of service.