This might be a little bit off topic, but I've always thought that it could make some sense to have a YC colocation. With enough companies, it could be more cost-effective than everyone getting their own slicehost. Of course, there would be a ton of other headaches involved like backups, outages, etc, but a lot of YC companies seem to be doing just fine administering their own boxes in a colo. I know it wouldn't be for everyone, but maybe a standard stack of software/configuations could be readily available for new YC companies. We all seem to have had the same frustrations with configuring webservers, mail servers (ouch!), tweaking database servers, etc. It could be yet another benefit of joining the YC mafia =)
I think an easier way to do this is for a forward-thinking hosting provider, colo, etc. in the bay area to offer discounted or free hosting to YC companies (free during the YC period, maybe not after); a few months of free hosting to have a shot at a successful site as customer would be more than worth it.
(alternatively, convertible debt)
Piggybacking on YC's selection process seems like a good business model in general.
I have considered offering free hosting to YC companies. Most of them seem to be a bit, ah, brand conscious (thus going for slicehost over linode) so I haven't bothered to push the idea.
But yea, if any YC company needs free hosting (and really, hosting is so cheap these days that it's all pretty much free) I'd be happy to give it to them. I'm younger than linode, but I've been renting Xen VPSs since 2005, which makes me older than slicehost, I believe.
I'm not asking you to go exclusive or anything (in fact, I think that's a bad idea. don't host all your stuff with the same provider.)
That said, I'd be a little surprised if any of the YC companies have to pay for hosting. Many, many ISPs would be happy to give away a little bandwidth in exchange for some publicity.
I think this would be a win-win for YC and the hosting provider. The startups would save a little bit of money, and the hosting provider would get a good amount of recurring revenue after the 3 months, since we are unlikely to migrate our servers after spending countless hours setting it up.