Its not 8 physical CPUs, its a 2 CPU system
Its just running hyperthreading and dual core each is a factor of 2
2 (x2 ht) = 4
4 (x2 dual core) = 8 virtual CPUs that are listed in say /proc/cpuinfo
As far as hosts paying more for the same specs, yes that's true because they buy quality hardware that will last for years
Nothing wrong with a few good custom built machines if you know what you're doing. But what happens when 4 years down the line your Power Supply blows, will you have a spare one that will work in that chassis on hand?
There are advantages/disadvantages to everything
keep it in mind