We have been using mercury/pantheon to host sites for a while now, we love the fact that you can get a fully configured Drupal hosting environment with all the trimmings for very little work. Specifically we have been using linode for our actual hosting, they are well priced, offer a good product and (this WAS the deal breaker) have mercury/pantheon "stackscripts" ready to roll (a linode stack script is essentially a build script you can use to setup your fresh server).
What we hadn't realised until recently is that mercury/pantheon has gotten a whole lot easier to setup - instead of requiring a bunch of steps (installing BCFG2 server, installing the client etc etc) it is now as simple as getting yourself a fresh Ubuntu box (10.04 works best I believe) and running this.
apt-get install git-core
git clone git://github.com/pantheon-systems/mercury.git -b master /opt/pantheon
And that's it. Done. We've been doing this on the rackspace cloud and can go from nothing to a completely built webserver in under 10 minutes (obviously though, once you've built one you can just image the thing and build new ones from that).
You can find more info in the git repo which is https://github.com/pantheon-systems/mercury
Lovely stuff ...