as a customer i could see paying yearly if i knew there were other expenses on the horizon, like flash vendors or vbulletin licenses. But if it's too cheap i just don't beleive it.
I shop hosting from reliable contacts, presences in some web communities where the entity might suffer if i started jumping up and down saying no web site no web site.
I've been lucky to bump into some real professionals and have been very pleased(and surprised).
For hosts looking for new business, i suggest cosying up to websigners. I am the one making hosting decisions, often placing them (hosting plans) inside a package for my client. that becomes a new client for the host when i let the "baby swim on its own".
Often i am not only looking for good software and cpanel robustness for me but for when the site owner has to take up the reins. it's chump to leave them in the lurch with clumsy tools.