What has Joyent done thats bad? I know their control panel is a tad clunky, but their support has always been top notch - sure its slightly pricey but I feel really confident they wont fuck up.
For example a few months ago the latest version of Capistrano wasn't working on Joyent's Accelerator (Solaris). Joyent support acknowledged this, but it didn't sound like they even cared or planned to do anything, so I just canceled my account and I moved to Slicehost. It's not perfect but you get more for the money.
So, Linode can be seen as less mature with their Xen setup than Slicehost. I've had no problems with either and I don't want to imply that Linode isn't reliable or anything of the sort. However, Slicehost implemented a Xen architecture about 2 years before Linode and sometimes businesses like a longer track record.
So, Slicehost became embedded in the mindset of many in the hacker community. For one, it was Xen and Xen is just better than the User Mode Linux that Linode used until recently. For two, Linode didn't always offer such a RAM advantage. When Slicehost was launched in 2006, you got a 256MB slice for $20. According to the Linode blog, they were offering 100MB for that price. It wasn't until March of 2007 that Linode equaled Slicehost with 256MB - and it was still running User Mode Linux. Part of it was right thing at the right time. Slicehost got in with Xen right as virtualization was going to take off and had a superior offering. Now, they cost a little more, but part of that is for the reputation they've built for themselves. I hope Linode starts building up their reputation now that they're Xen backed and offering a superior package per dollar and I hope that pressure from Linode will get Slicehost to offer a little more.
That's probably way more of an explanation than you wanted of why Slicehost holds the position it does in the hacker community.
Today, you can get a VPS from Slicehost, Linode, Amazon, or a number of other providers. A few years ago, Slicehost was just starting up and there was a waiting list of months sometimes, Amazon's EC2 had no persistent storage, Linode was using User Mode Linux which is terribly slow. . . Joyent was fast, had lots of bandwidth, SAN storage, offered 16 and 32GB RAM servers, were the host of next big thing Twitter, and were the official host of Ruby on Rails.
Today, Slicehost is a division of Rackspace and SAN storage will probably be available soon. There is no waiting list or prepayment for Slicehost anymore and you can grab a 15.5GB server. Slicehost is under half the price of Joyent except for transfer costs (Joyent includes 10TB with each plan - whether that's like Dreamhost's "unlimited" bandwidth is yet to be seen). Today, EC2 is no longer beta, comes in various sizes (medium, large, XL) and has persistent storage. And all three (Linode, Slicehost and EC2) all offer instant activation. With Joyent, it's a human-run system.
That probably one of Joyent's biggest failings. While Slicehost automates all of its build process so that you can be up in a couple minutes, Joyent requires a tech person. More than that, they tied themselves to OpenSolaris and Sun and there hasn't been as much activity there. Plus, they're telling everyone to use Solaris' Blastware packaging system which is just bad and most people would rather have their own Linux flavor (as their competitors allow).
Now for Joyent's advantages:
-Zones offer fast disk access compared to Xen. This probably makes it more suitable than Slicehost or Linode for a really high-end database server, but it probably wouldn't beat EC2's EBS which is just really fast.
-SAN storage. Joyent can offer you (virtually) as much storage as you need. EC2 can as well, but Slicehost and Linode can't.
Joyent used to be where it was at. Linode, Slicehost, and EC2 have caught up and in some ways surpassed it. Combined with a lack of polish on the Joyent backend (surprising since they spend a ton on their frontend polish) and it just doesn't look great. Don't worry too much. It's not as if it's terrible or anything. It will serve you, but you probably could have gotten something cheaper somewhere else. Joyent needs to rework some of its infrastructure to remain competitive with a Rackspace owned Slicehost, a non-beta EC2, and a Xen-powered Linode that is constantly increasing CPU, bandwidth, RAM, and disk to its users.
Bottom line: Joyent offered a scalable storage, CPU, and RAM architecture back when Slicehost, EC2, and Linode didn't. So, if you thought you were going to be the next big thing and need a few 8GB servers, Joyent was the only game in town. They aren't any longer and don't seem to be taking steps to ensure they aren't history as others improve.
If nothing else, it's a great way to see how an underdog can quickly push ahead of a entrenched prize fighter.
If you're running a business where unexpected downtime costs real money, as I was, Joyent's ticketing system was totally inadequate. We've since switched to a dedicated box at Rackspace (for quite a bit more money) and I've been extremely satisified. It's expensive, but Rackspace support really is top notch. (For example, I once fat-fingered an iptables config rendering a server totally inaccessible. Rackspace detected the problem, sent someone into the data center to bring up the console, fixed it, and sent me some tips on iptables before I could even file a ticket.)