Are there databases on physical servers?
I wonder though if a VPS is good for a sql/nosql database? I would rather purchase database space hosted/managed on a physical server tuned for I/O performance.
The combination of VPS for web and application servers communicating w/ PostgreSQL, MySQL or MongoDB on physical servers would be ideal.
Seriously, though, you'd want your database (or at least the indexes + active portion of tables) to fit in RAM. Compare the cost of a large linode with lots of RAM (e.g. linode 5760) with a physical server with all the necessary I/O optimizations such as SAS drives in RAID 10.
Linode could price a database resource just like a node. A 1440 database would guarantee that only 10 accounts could access that server. Seems like a win-win to me. I don't know of any hosting that provides a combination of services like this.
So, my advice: try it and see, and then tune it
A friend once told me, "if it aint broke, tweak it. if it is broke, more duct tape"
It has become words to live by.
If "the database is almost always the bottleneck of most web applications", having a physical server of just databases all thrashing I/O certainly wouldn't offer better performance than a VPS where you'll be sharing resources with users who may not need as much disk I/O.