"Cloud" is a marketer's dream buzzword; they'll tag it to just about anything to get you to buy into it. Hosting companies in particular like to advertise cloud hosting; it seems to be a redundant, affordable, and scalable hosting alternative to traditional hosting solutions.
So is it?
In a word: yes. Cloud hosting can be a very economical solution to traditional hosting solutions, especially if your company plans to grow aggressively in the next few years. Using the cloud adds redundancy while still not being too expensive, and acts and functions just like any regular server you might employ while having the tools in place to scale easily and affordably.
As an example, we can look at Amazon's Elastic Compute Cloud. Amazon's EC2 is a very affordable and scalable system for hosting your servers. Amazon's Cloud is priced per hour; you're billed only the amount of time you use the server. Let's assume that you use a Large Instance (virtual dual-core, 8 GB of RAM) 100% of the time with 2TB of data in and out. This will price to about $744 a month; an equivalent package from Rackspace, including bandwidth and hardware specs, costs $769 a month; you are saving $25 a month just by using Amazon.