It is hard to remain objective when evaluating the question of whether or not a cloud versus physical infrastructure is preferable as both have advantages and disadvantages depending on the current It environment, the types of applications, etc. With that said, there are some critical differences that are not discussed in depth. In one of the most extensive conversations on this topic, Frederic Faure provides an in-depth analysis of a number of models in Amazon-like (not just EC2 here by any means) enviornments versus physical enviornments with notes about important (but far too often overlooked) issues such as audit capabilities, matters of control and even the impact on system administrators.
Cloud AWS Infrastructure v. Physical Infrastructure
July 8, 2010