I worked at Sun for a period on Sun Grid. There were two offerings - one aimed at B2B and one that was public-facing. The latter was launched as network.com, and essentially offered the ability to submit a job and only pay for the processing power used, hence Scott McNealy's "$1 per CPU per hour!" utility computing promotion.

The B2B side (which is the implementation I worked on) was quite a bit different, with customers uploading a 'golden image' into a node which would then be used to pre-provision a pod of servers (i.e 512 x v20z) on demand.

There's certainly an argument that Sun were first to tout cloud IaaS, but what was missing was a decent API to all this.