With all this talk of KS recently...
I seem to recall they were using 48-core AMD CPUs. I don't remember what the storage was. I know SuperMicro makes 96-core configs, too.
I wonder if it would be interesting to have a "completely dedicated core" model. I don't run a VPS company so I don't know what would be needed underneath to make that work (if you can pin a core to particular VPS - I know you can with VMware but I'm not sure about Xen/KVM/etc.) Say you charge $7/month for 1 CPU completely dedicated to you, plus some amount of RAM, disk, bandwidth. To get sufficient I/O, perhaps a mix of SSD and HD. If the CPU isn't in use by the customer who "owns" it, it's sitting idle.
I guess it depends on what the virt software can do.
My thought was to offer fixed units - $7 per CPU with accompanying ram, disk. Customers buy by the CPU, and you're getting a nearly dedicated server. You want a bigger one, you buy another unit which comes with another CPU/ram/disk.
I don't know if 47 or 95 (leaving one for the underlying virt OS) VPSes at $7 per CPU would be profitable.
Just thinking out loud. Don't have the spare $10K or 20K to start a VPS company at the moment :-)