Every technical solution has it's drawbacks. Servers in the closet have to be maintained, backed up and refreshed, but they are physically and logically secure and usually the best choice for business critical applications.
But what about those web-apps that have broad public exposure? Or the ones that need to scale in an instant? Are these not candidates for living in the cloud in some form? In some cases, yes. Here's an excellent article that can help you evaluate the alternatives: