Most of my good sites are hosted by Dreamhost or Pair. Both have provided me
with reliable hosting and responsive customer service. Dreamhost allows you to
host unlimited domains on a single account for $7.95 a month. Pair costs a bit
more for their developer account, but it allows you to host sites on different IP
addresses, and I have NEVER had any issues with Pair.

Dedicated versus Shared Hosting

I have found shared hosting to work well for me, although some people
recommend using dedicated hosting (which is typically far more expensive).
Shared hosting places many domain names on the same IP address and same
server, whereas dedicated servers allow you to place just your stuff on a server.
Search engines such as Google usually place spam penalties on domain names, not
IP addresses. Although it does happen, rarely does a hosting network get
penalized. I believe the SearchKing network is one example where a whole hosting
network got penalized, but this is extremely rare.
If you are going to be making major investments into the web, then it may be
worth it to buy a reliable dedicated server. Off the start, I could not afford one so I
used shared hosting. As my business model progressed, and my traffic increased, I
later bought a dedicated host for SEOBook.com. Most of my other sites are still
hosted on shared hosting accounts.

Free Hosting

I do not recommend free hosting. With the plague of garbage on the web many
people may not be willing to link to sites that reside on a free host. Free hosts
usually use your content to build link popularity or put some ugly banners on your
site, which ruin the page flow and make it look exceptionally unprofessional.
A commercially-oriented website needs to show significantly greater quality for me
to want to link to it if it resides on a free host.
I have seen some blogs that were hosted at Blogspot (Blogger’s free host) do all
right, but that exception is based on the fact that blogs are generally more personal
in nature and not so commercially driven. Even those blogs would probably be
better off if they used a more feature-rich blogging engine. Plus, if they ever want
to move their site, it is hard to consolidate the link popularity they built up if all
those links point at a Blogspot location.
If you create a subdomain from a free site and eventually want to move your site, it
may be hard to move some of that link popularity, and aged domain trust you
developed, to the new location.

Cheap Hosting

There are many risks with bad, cheap hosting, but decent, cheap hosting of
secondary type sites can help diversify your business model and lessen the risk if
your main site goes down. One cheap host I have used is 3.75 hosting.
Once I renewed my credit card and forgot to give them my changed credit card
details and my sites immediately went down without warning. That is just one
example of the type of things you can expect from cheap hosting providers.
If you are unsure how reliable your host is, you may want to use a tracking service
such as Internet Seer.

Host in Your Country

Many major search engines give sites a relevancy boost if they are hosted in the
same location as the local search market. In some locations, local hosting may not
be economical, but if you are promoting a site primarily geared toward the U.K.,
you would want to host that site in the U.K.

Resources

$3.75 hosting (http://www.3.75-hosting.com)
Dreamhost hosting (http://www.dreamhost.com)
Firefox live http headers extension
(http://livehttpheaders.mozdev.org/)
GoDaddy domain registrar (http://www.godaddy.com)
Google Image Labeler (http://images.google.com/imagelabeler/)
ICANN domain registration information (http://www.icann.org/)
Internet Hosting Report (http://www.internet-hosting-report.com/)
Internet Seer: host tracking (http://www.internetseer.com/)
Moniker domain registrar (http://www.moniker.com)
Pair (http://www.pair.com)
Porter Stemming Algorithm
(http://www.tartarus.org/~martin/PorterStemmer/)
Server Header Checker
(http://www.seoconsultants.com/tools/headers.asp)
Web Bug (http://www.cyberspyder.com/webbug.html)
WordNet: a lexical database (http://wordnet.princeton.edu/)

Some Notes

With how many pages there are on the web, quality will usually win over quantity.
With that being said, sometimes it will make sense to have multiple, similar
websites covering slightly different topics. Doing this can help you create topically
authoritative inbound links to different sites in your network and give you a multibranded
approach to marketing.
However, you want to make sure your sites are all different and unique. If your
sites are extremely similar, then your sites may receive a spam penalty or have the
nepotistic link popularity discounted. Even worse is that if you interlink them all,
then all of your sites could get penalized at the same time.

Those using strong brands and good ideas can usually do well without creating a
topical network. If you create a topical network expressly to deceive search
engines, then you are taking a risk and your sites may get removed from the search
indexes. In addition, some search engine relevancy algorithms, such as Google’s
current algorithm, tend to favor one authoritative domain over using many smaller
similar domains.
Many of the more aggressive techniques are used by people who create crash-and
burn-domain names. They use a site until it gets penalized and then use a new one.
They actually start building up multiple other sites and networks before the first
even gets penalized. If your brand and domain name are important to you, then
make sure you use caution to protect them.
How you wrap/package/sell the content is important. Many blog networks seem
to be able to get away with murder right now because they are called a blog
network. Other publishers that have tried similar network approaches have got
banned for it. Over time, how blogs are treated may change though, and any way
you slice it, you still need to get links from outside your network.
Keep the following in mind when developing a website network:

I do not recommend buying multiple domain names exclusively for deceptive
practices. Many of my sites are about SEO, but you can break ideas down to their
core and make useful sites in less competitive markets.
For example, one site I own is Search-Marketing.info. This site is similar to the
contents of this e-book, although the site is somewhat dated. That site is not a
well-branded name. I had many concepts on that site that later were extracted and
made into their own sites:

Any more than about two or three words in a domain name and it becomes less
memorable. Some of the most memorable websites do a great job of branding by
creating their own word: eBay, Skype, PayPal, Yahoo!, Expedia, Slashdot, Fark,
Travelocity, Google…
However, most successful businesses are soft innovations; they may not be able to
afford the time, money, and effort required to create, brand, and add a new word
to our language. You can create a name that is well-related to something people
already know. It is easier to market corn sugar than it is to market fructose.

If you are not going to develop a strong brand, then using keywords in your
domain name may give you a competitive advantage in search results. Having your
keywords in your domain name can increase click-through rates on search engine
listings and paid ads as well as make it easier to get keyword rich descriptive
inbound links.
If your brand is exceptionally strong and your content quality is second to none
you still can rank well in search results after enough related resources reference
your site, even if most references do not mention the keywords you want to rank
for. Google’s search algorithms have moved toward pushing natural authority sites
even if they do not have much relevant anchor text.

Branding Your Site

A keyword-rich domain name will make it easy to get inbound link text with your
primary keywords in them, but don’t forget that your domain name also plays a
role in your branding. Your domain name should have your branding in mind as it
can help reinforce the ideals of your brand.
On the web there are many different business ideas or business models. If low
cost is your business model, then you will find people who are willing to work for
half your wage that will slash throats to get by on razor thin margins. It is not a
way to enjoy life.
Someone can always do your job cheaper. For example, Google turned labeling
images into a game. Now thousands of people are labeling images, for free, to
improve Google’s image search relevancy. You can take a look at this process by
visiting http:// images.google.com/imagelabeler/.
Branding is one of the most important parts of building any website or web-based
business, and it is what allows you to establish healthy profit margins. Every
Monday, Rob Frankel holds free branding clinics on his website. I recommend
going to at least one of them and asking a question or two. He also wrote a great
branding book by the name of The Revenge of Brand X.