I think you're right, there is a delicate balance between 'getting what you pay for' and simply paying too much.
What would I look out for?
1) Lengthy contracts with lots of legal jargon. I feel that if you're not happy with your host you should be able to pick up and go and they should even HELP you with that (as long as you've paid your bills)! Some of the companies out there will sue you for the remainder of your hosting contract..... ouch!
2) There is a real wide spectrum of hosting prices out there. Before writing a host off as being too expensive it's always a good idea to look at 5-10 hosts. It seems like a select few super cheap hosts taint perception for everyone. Look at my other thread, there's already two people bitching about my prices. Yet, when I developed my price matrix I shopped myself against about two dozen adult hosts to develop those prices which I thought were a good value.
3) Look for hidden fees! Some hosts out there will not only charge a premium but also nickel and dime you for every damned thing. Me, for example, everything is on OUR dime when something goes wrong for one of our dedicated clients. And, small script installs or troubleshooting is always free.
I always like the honest approach. If a hosting company seems too expensive get those guys on the phone and ask them what's up! Say, "look! these X companies are charging Y and you're so much more then that". See if they can give you a price justification that makes sense AND makes you want to give them your business. Many won't be able to do that or you'll feel like you're seeing right through them when they get on the phone.
Equinox is right! No company is downtime proof. Go to Candid's site and they say they have 0.00% downtime. What about those threads a few weeks ago about their network being down? LOL Was everyone imagining that?
For me, any host that says there is never the potential for downtime is a liar and I'd never give him the business. Conversely, any host that experiences frequent downtime is someone you want to switch from!
I agree with Salsbury too... Saving $50 bucks per month is negligable to any serious webmaster. I'd even venture to say that the margin of savings could be much wider depending on your volume without really mattering as long as the host is doing a super job.
Lastly, I find Pipp's comment funny. "when you pay more for a service at one place then you would do for a service just as good elswhere then your gething fuckt" - You're not getting fucked, you just never did your research and shopped it before signing up. That puts you at fault, not the host. Everyone has the right to set their own pricing.... basic business! Low pricing = High Volume, High pricing = Low volume.... Probably somewhere in the middle is the sweet spot.
That's my
Brad