Good article on the economies of scale
Although this article on Google and cloud computing sounds like a bit of an advertisement (it is!) it is also a good read. There is no way that individuals and all but a few companies can compete with Google on cost per computing unit (CPU, memory, data storage).
I am a huge fan of Amazon's EC2 services: easy to use and very flexible. I am not sure how well this will work, but I want to try using Amazon's Elastic MapReduce to produce data for a Java of App Engine application that I hope to have time to write in the next month or two (MyThingsOfInterest.com, that I mentioned in my last blog). Amazon charges for bandwidth reading from S3 and there will be a cost pushing data into Google's App Engine data store. It may well not make sense, cost wise, to split a system between two competing platforms.