For years we used nothing but shared servers, not through choice but rather cost and lack of technical (inter-networking eg Linux) abilities. On some providers they were issues, such as security; we once wrote a script which managed to display ALL username cpanel logins for the server we were on, not on purpose but by complete accident whilst playing about with new PHP functions.
On other hosting providers, we found other problems such as when we did a lookup on the amount of domains on our shared server - some had over 1,000 cpanel accounts running! This is fine, unless alot of sites require access to some core services such as MySQL etc. For instance, most providers that over-quota (as above) will not allow the same amount of DB accesses - which basically means at some point some of the DB connections will fail for some accounts.
For a client that I worked for this was clearly unacceptable as they had over 25 E-Commerce websites, and one lost connection could lose the customer and potentially hundreds or thousands of pounds.
Another factor for this client was using very modern applications such as Magento, which basically crawled to a halt under a shared server. Both of these problems were solved by a dedicated server, managed and setup by DataFlame, who are clearly the best hosting providers in the UK, in our opinion.
There are of course other reasons why a Dedicated Server is very useful, including SEO - such as setting up similar content websites under different IP addresses - although with google recognising links from the same Class-C, this is become less so.
But the greatest benefit, of course, is the fact that you get complete control over the whole server as well as the software that it is running - from my point of view, think Zend Framework!
