DO's biggest problem is their lack of "zero-downtime snapshot backup and upgrading". i've not used Linode but anyone know if theirs is any different?
As for backups, Linode backups seem to get a bad reputation. They do take a snapshot of a running instance - but reports from the forums indicate that they regularly fail, leaving you with a missing backup at some points. The only way of restoring a backup is to deploy that backup as a new server.
I'd recommend avoiding Linode backups and doing your own.
Not true. You can restore a backup to a node as long as it has enough unallocated disk space. The simplest ways to create enough unallocated disk space are to create a new node or to delete or resize all your disk images.
I agree it would be nice to do upgrades in place but presumably they have very good reasons for not doing so. Are you aware of any provider which does this in a seamless way? I'm not really sure how they'd do it, particularly for RAM.