I do agree with the OC, but I also think his situation leans unusually in favor of the colo option.
That is, 3.7 month break-even is a much stronger argument than 10 months, so I'd be interested in hearing what others have found to be the break-even point with various cloud providers.
I use boxes in the cloud for various things, but not yet for hosting. We have a couple big fast machines in a cage, of the sort that would cost a grand a month if they were on EC2, that we run all our sites from.
Once you have a single project that justifies the colo box, the marginal cost of starting a new project with a new website is zero. No need to configure a $20/month slicehost box and cross your fingers that it can handle a Redditting. You just put it on the monster box that can handle anything you throw at it until it demonstrates that it needs a big machine of its own.
That is, 3.7 month break-even is a much stronger argument than 10 months, so I'd be interested in hearing what others have found to be the break-even point with various cloud providers.