Clients never listen to their providers when it comes to script updating. In my experience, most of them do not update their WP until it is compromised.
That being said, let's shed some light on the original discussion. I do not think server is going to be phased out anytime soon, or ever. New technology will come, like cloud or VDS but physical servers will always be there. Same goes to VPS.
The major influencing force for VPS vs cloud is the price. VPS should always cost less than that of cloud.