Freemium is the concept...
limited disk space, limited dbs, limited email accounts.....
http://en.wikipedia.org/wiki/Freemium
Am I wrong?
They don't necessary need to be bad hosting companies/services. They have a different business model.
Some people might start using it to create basic pages and after... "well... they were nice to me... I will keep using them.. lets pay... and that way I dont need to move all my shits to a new host..."
I guess that webhosting has a HUGE retention rate....
Peace