I believe I had read something like that too in the past. I tried googling it but did not find anything. The only thing I remember is that $9.95 is better than $10, because most people will compute it as $9, so they will feel they are saving.
Same thing when you see offers on bulletin boards on the road for $999 instead $1000, 3 digits do not frighten customers like 4 digits do.
Yes these playing with words are used in the shopping world and they are not confined to the web actually. For years, shopkeepers are using price tags wisely for attracting visitors and web hosting area too is one of the zones to try this method.
If your running a web hosting business you should know this stuff It's called psychological rricing. Setting prices has also must take into account, 1. Competitor pricing 2. your hosting expenses. What i see most important is option 2 where you need to set a miniumum ammount of where people first pay off your hosting expenses.
I've had the best luck with $x.99 and $x.95 pricing in the past. However, I've seen a couple other tactics as well. As part of a branding tactic, one could price *all* products at, say, $x.66. Or $x.88.