A few years ago, when I was in the market for buying new hosting, I remember having the choice between shared hosting and dedicated hosting. That was a clear choice really, if you needed the powerful infrastructure and you were willing to spend money on hiring somebody to manage your server, you’d go for dedicated hosting, while for pretty much anything else you would start with shared hosting.
Nowadays hosts have fine tuned their offerings much more. We’ve seen the introduction of VPS and Cloud services, while other hosts have introduced an extra level of management to take the dirty work away from their clients, obviously at an extra cost. Hosts also started to target particular platforms like WordPress, since they have a huge market share.