DreamHost Blog: The Truth About Overselling! The lovable batshit-insane voice of Dreamhost* explains how overselling isn't evil, at least for webhosting. The article also addresses "CPU minutes," an important eh-not-quite exception that DH customers run into on a regular basis, often thanks to blog comment spammers. (Update: DH has recently lifted their CPU minute restrictions! Problems will be handled on a case by case basis, pretty much as they had been in the past.)

I've never run into any problems with the practice of overselling shared web hosting, at least with regards to capacity. Then again, I've never known any sensible person to complain about it, so...

* It feels like a weird business practice to publish a monthly customer newsletter that's over-the-top wacky and sometimes borderline offensive, but the damn things are readable, and I wouldn't still be subscribed if they weren't.