IMHO, Cloud hosting will be always separated from shared packages and dedicated servers.

Cloud hosting vs shared packages:

Cloud servers are standalone servers and need separate administration. That involves more human resources (admin work time), as well as more hardware resources CPU/RAM/HDD for keeping standalone OS on that server. These two items in addition to licenses for VDS add much more cost, that is why cloud servers can't be as cheap as usual shared packages.

Cloud hosting vs Dedicated servers

For sure, in many cases I can think of cloud servers as the only option, but sometimes customers want physically dedicated servers (e.g. for PCI compliance) with software located hardware that belongs only to them. While cloud solutions and dedicated servers become closer with time, they are still different. Cloud servers are optimal when fast scaling is needed. Dedicated servers offer much more diskspace (that is usual too expensive on cloud servers) for lower price.

So, cloud servers are somewhere in the middle and I don't think that they will make other traditional solutions vanish.