Cloud hosting is the next evolution of VPS hosting. The difference is with cloud hosting your memory and disk space is not fixed. The hosting company can easily allocate more resources to your node without forcing you to migrate your application. Cloud hosting also can provide great redundancy in case the server your node is running on crashes. Your website never goes down and all your data instantly up and running on another server within the cloud. They call it cloud hosting because your website literally floats around between servers depending on server load.
Cloud hosting is considered by most hosting companies to the end all to hosting. It allows customers to purchase only the hardware they need, while allowing hosting companies to maximize profits per each server.
The only negatives to the cloud is the separation of your data from the application servers. Most clouds use large Network SANs which use 20+ hard drives to store Terabytes of storage. These SANs use advanced RAID configuration to ensure both performance and redundancy in case of a disk failure. However even though its rare, SANs can still go out, ( as I found out from previous hosting experiences with HostMySite.com / Hosting.com ). This is the reason we prefer to run our clients on our Colocated Server