The super cheap dedicated servers are probably better value for money, but just remember that hardware can fail.
I know that Linodes
aren't immune to the problems, but you've got less hassle when things go wrong. If there's hardware issues on a cheap dedicated server then you'll have to send a support ticket and pray that they answer it in a reasonable time, which sometimes doesn't include out of hours support. If your server goes down on Saturday you might not get a working server until Monday morning unless you pay extra for it.
Whilst I don't mind doing the sysadmin work on a physical server, it's one less headache to admin a virtual server and concentrate on the software side of things.