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I host some sites on single drive dedicated servers. I do frequent backups (2-3 per day) and have mirrored the most critical sites to some cheap vps. The same infrastructure would had even if I hosted those sites on much more expensive dedis of raid 10 with 4 drives.
Single drive is not fast, but for hosting 2-3 websites with 20K visitors per day, is fast enough. And if a drive fails, I can always switch to the cheappie mirror vps for an hour and restore it on another server from backup (it won't take longer than 30-60 minutes to rebuild all infrastructure).
Of course, if you want to sell hosting services and fit 100's of vps in a single drive, then, this is different. But for a lot of people, single HDDs with some older cpus could be working much better than a vps.
The right answer is that of course your data should be backed up. It's also sometimes the case that I want a dedi for pure computation, and only need minimal disk to hold the OS and a little bit of working data. If the disk goes out, just have a new one put in and reinstall everything, since the data actually lives elsewhere.