Its better to go with a host that tells you what amount of space and bandwidth that you are actually allocated.
The truth is not quite so absolute.
1. A host offering huge amounts of anything for a relatively low price, (say 1TB of space for $4 a month) is no better than one offering unlimited. You're about as likely to be able to use 1TB of space, as you are to use unlimited. You're about as likely to be allowed to use 1TB as you are to use unlimited. (Always read the TOS carefully, especially if you know you're a rather heavy user.)
2. A limited bandwidth or space are not an absolute guarantee that you'll be able to use them all up, under any circumstances. If you're offered 100GB of data transfer, you're supposed to use it during a month, not an hour. While that is a bit of an extreme case, it remains true that any host expects only a certain CPU/memory/I/O usage, which will generally be smaller the less you pay. The same goes for unlimited hosting.
Unlimited is not a guarantee of bad service, any more than limited is a guarantee of good service. Your hosting experience depends mostly on the specific provider that you end up choosing.
The above is true for shared hosting. Reseller hosting comes with a different scenario and limitations, and unlimited packages there make less of a sense. It remains true that you can expect about as much as you pay though, and knowing the price of a good dedicated server can help guide your estimates on what is possible and what is not.