How can you make clouds better
I have perhaps been overly critical of clouds. I do not think clouds are useless. They certainly have their place and usefulness. I just dislike the hype around the clouds since I find it completely misplaced. I see clouds primarily as a way of easily "creating" and "disposing" of hardware ie. you need extra couple machines you can at a press of a button create them. When you are done you can dispose of them. However they also have some major drawbacks which I have alluded in the past ie. in Cloud Computing's Achilles Heel and Trouble with Cloud Computing.
That said there are a number of ways clouds can be improved. Some may be impractical, some may be expensive and some may be overly complicated but they are certainly options. Shall we go through the list 
- Don't use virtualization - you could certainly implement a cloud where an instance you get runs on raw hardware. That way you are guaranteed to have a dedicated piece of hardware that is not affected by other users' (mis)use. This would be a lot more expensive but some people may be willing to pay for it
- Intelligent web traffic load balancing - one of the big issues in general is that load balancing methods such as round-robin, server with least connections are imperfect since a server may get slow for a number of reasons and a portion of your clients may receive "substandard" response. Chances of that happening in shared environments is greater. Thus devising a load balancer which can "intelligently" figure out which server is slow and deal with it accordingly by either taking it out of the pool or sending less traffic to it.
- Similar to 2. for your relational DB traffic you would have to use a DB cluster and devise a way of preferring "faster" DB servers. This part in some ways "scares" me the most since if you start using synchronous replication you have to wait until all members of the cluster have commited the change. If you start doing asynchronous replication you will run the risk of DB inconsistencies which you will have to resolve.
There are likely other options but you can see from above that this gets real complicated, real quick. It can be done it is just a lot of work and a lot of QA. Hopefully someone comes up with a generic solution for problems 2. and 3. and those become non-issues.