-For server uptime, stats, etc I use nagios
-For security monitoring, I mix the open source OSSEC + Snort: http://www.ossec.net
-For availability+integrity remote monitoring of my sites/domains I use sucuri: http://sucuri.net
We have been using munin and nagios in various setups. Munin is great for the ease of plugin creation but the alerting capabilities are lacking. It also has a few fundamental flaws such as gaps in the graph when a server can not be reached.
Nagios otoh is the kitchen sink solution with extensive alerting functions, but the UI is cluttered and configuration/maintenance tend to be pretty nightmarish.
I kind of like the nagios/zenoss relationship model, where nagios provides a great open-source platform for monitoring and analysis, and zenoss provides a clear emphasis on simplicity, presentation and automation on top of that platform. I think you should check those out, and i'm interested to see how that relationship and that business model develops in the future as well.
If you do have a budget for your monitoring solution though, there are some pretty cool solutions out there, but i'm obviously biased, so i'll refrain from going on a long diatribe about it.
Munin is only one component of a complete monitoring setup however (good for observing long term trends in resource consumption). I also use Monit to issue alerts if a service is down, and Pingdom to monitor external service availability. Has worked well so far.
As a disclaimer, I am definitely a neophyte sysadmin so I'm certainly not using the tools correctly. I ended up turning monit on just for checking if my processes are running instead of checking for memory issues. Seems to be running fine, and I haven't heard a peep out of it since I changed the passenger module configs.
Then I have monit setup to keep an eye on server load, hd's, nginx, postfix + dovecot etc, and if monit fails to restart services for whatever reason, I have pingdom as my last line of defence, at which point I look into it manually.
(This is a product from my company)
It's therefore about the value the service gives you i.e. support, ease of use, fast setup, easy alerting (e-mail & SMS) and so on.
In short - if your model works, great, but I can easily see it not working due to the service not being positioned properly.
A hypervisor for server providers that does these tasks in background (without the root server owner seeing it) and alarms the provider if a hd breaks down, temperature is too high, etc! Which can then automatically react.
I think there is a need for your service, but I think it's too expensive. I wouldn't use it. A server starts at 50€ per month, why spend 1/4 of it just for monitoring?
Could do with a more comprehensive, more revealing monitoring solution, but unwilling to look at Nagios and found Zabbix quite closed looking and Zenoss a bit less pleasant than I was hoping.
+ SiteScope is pretty easy to set up and can be extended with scripting.
- Support since it's gone to HP has been pretty bad.
french language however