We have a couple of servers at the office handling various duties like file serving, staging environment, backup email and support website in case our data cent

We have a couple of servers at the office handling various duties like file serving, staging environment, backup email and support website in case our data center goes down. We used to run a few sites on them before we migrated to fully dedicated hosting. It's not necessarily a bad idea, but I'd probably not do it again now that cheap VPSes are a commodity. Outsourcing the physical management allows me to not worry about assembling hardware, backups, power outages, network outages, burglary, fire and flooding. Neither will the server leave users hanging every time someone on the network downloads alot of data. Unless you're doing some serious processing, a cheap Linode VPS should hold you over until you're profitable enough to upgrade to some real hosting.