That may be fine for people with the right skills, and time. I don't now in the US, but these past years in France we have seen several large discount offer of entry-level dedicated server (at 20-30? a month, mostly unmetered 100Mb bandwith) that even small (but not tiny) project could afford, and are quite adequate for common web hosting (common, in the mouth of an über geek).
However, it still require skills and time. For example, Rickard being able to write SQL and PHP doesn't mean he can write and keep up to date a iptable conf, or has the time to patch half a dozen software each week.
The advantage I see myself in good (yet cheap) shared server, beside the lack of skills and time required, is the strength of it. No dedicated server (at affordable level) could compete with the kind of endurance I got from my shared server. 1Gbp front ddos attack? No problem, I don't even feel it. Two motherboards just fried? The same. That's the power of cluster