Our biz model includes colo, but only for those sending us their own equipment. We've felt that when someone sends us their own box, they are less likely to be a spammer/hacker/miscreant using us as a throw-away service, and are less likely to be using a stolen credit card. The relationship seems more tangible when they provide their own equipment.
I know of at least one provider locally who is in the ultra-cheap (under-$100) dedicated server market, who's had a lot of problems with spammers, IRC, DDoS, etc. who abuse the account until they're caught, then move on. A spammer doesn't really care if his $69 server is shut off for abuse, because he's already blown out 100-million emails in the last 3 days, leaving the owner of that IP block to clean up the storm of abuse complaints, SPEWS/RBL problems, etc.
Gernally speaking, do those of you who provide dedicated servers (as opposed to "send us your server" colocation only) find network abuse, illegal content, and/or stolen credit cards, to be a significant problem?