In 1998, you pretty much had to use commercial software if your site had any kind of traffic. That usually meant an Oracle database, and Oracle would only really scale vertically, so you had to spend even more up front on hardware that was powerful enough to scale.
Implementing Oracle on Sun wasn't something that most people (even good programmers) could do themselves, so they hired consulting companies, which cost even more.
Now, you might pay $5-10K to outsource an iPhone app. Then, you'd easily pay $100K just to get your database implemented, and easily that again for licence fees for your web software (Vignette anyone?).
Now, you pay $20/month for a basic EC2 setup, knowing you can scale it out horizontally. Back then you'd pay $50K up front for Sun hardware that would support the traffic you might get.
I don't know anything about the example given (DealPilot.com), but I do know that now days something that could run on shared hosting in 1997 could be hosted for close to free  now. That's still more than 10x less that $100/month.
I would also point out that developing an app for the iPhone costs $99 if you do it yourself (which appears to be how they built DealPilot.com), so that is still more than 10x less than $100/month over a year.
Lets compare costs for a year:
1997: $100/month = $1200, plus $3000 for server = $4200 (I assume there were hosting costs for the server, but I'll assume they were similar to the $100/month for shared hosting)
2011: $20/month for EC2 hosting (being conservative here - EC2 would let the company start off a lot cheaper than this and scale expenses as revenue grew) + $99 Apple fee = $339
 Free hosting examples include: Google AppEngine up to its free tier, Amazon's free EC2 offer. There are numerous examples of < $5/month virtual servers available, too.
If something takes off I'll buy a dedicated server for it, but if you're starting a company, get a Dreamhost account for $10/month and they throw the domain in for free. You can buy yourself two years of hosting runway for $200. If you max your dreamhost account you're well on your way.
I don't even bother paying for github, just throw git on my dreamhost account. (They have dedicated SVN services as well)
Also, I just got about a dozen notifications today that dreamhost had upgraded all my wordpress sites to 3.0.4. I don't do anything they take care of it. Someone breached an account? I get an email.
The only time I've ever run into trouble with dreamhost is an old old e-commerce site that needed MySQL4. I could get the ancient version of PHP it used working but couldn't get MySQL4.
It might not be the fastest, but you can't beat the value, especially if someone you know can give you a discount code (30OFFER is mine. I think I get some money off my bill if anyone uses it.. )