The specs of a Raspberry Pi is not dissimilar to what you get from many VPS providers, I'm sure it's only a matter of time before someone tries to be a provider using them.
What would the pros and cons? Some thoughts...
- they're cheap, but are they cheap enough to be viable?
- no HDD, but I imagine a 16gb SD card would be plenty (all things considered)
- low power (3 watts), low enough to be economical (adream.homeunix.com/)
- I assume SD cards have much better IO than spinning drives so I'm guessing a 1gb swap file might not be that bad
- no moving parts, does that mean they don't need cooling
- currently they can't be mounted very easily as they don't have any purpose designed holes
- I'm guessing there are advantages from a provider's point of view to having many virtual servers on a single box, eg configuration and allocating to customers etc, but then SD cards are easy to clone