A cloud offering will be more affordable, as you follow the "pay as you go" model. If you need extra security, then a dedicated is better - but you can have dedicated/vps on the cloud, too. Like Vps.net for example.
I would say grow your infrastructure as you need it, rackspace cloud would be a good start.
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i tried rackspacecloud for one of my sites and it was a very nice system, but once i did the numbers on scaling hauled ass over to 10tb.com. I got a good deal on their cloud. The only problem is I find the support to be a bit vague compared with rackspacecloud or wiredtree (I have a dedicated there). It's hard to complain at 10tb though due to the deal you get.. but I'm basically going to be doing 10tb + rack911 for management & security..