There is a lot of spectrum in the middle between AWS micro and your own datacenter(s). One don't have to jump from the cloud to datacenter - just rent/buy a server or two, or rack of server or two.
Sure, but the management overhead from 1 server to 20 racks scales, at best, linearly. I've seen a lot of places just past the point where a single sys-ad person with a thumb drive is viable, yet they choose to not invest here and instead spend 2-5x on going to the cloud.