If you have followed the web hosting industry, there is too many players. The industry is beyond saturation point. A lot of big, established players, a lot of small players and so on. I think it is really a challenge to start a web hosting service at the moment.
But instead, you can give a hosted service. For eg, Facebook is a very big blog + forum service in the core. They just have a custom layout which clicked.
What will you provide as a hosted service is that is more profitable ?