I definitly prefer using a local company. I tried a few online host in the past for my personal websites, and had bad experiences. A lot of it was just my own piece of mind. I never really felt comfortable not bieng able to communicate face to face with a real live human.
Luckily, there is a great locally owned and operated company about 2 miles from my house, which I think aids in speedy data transfer. It might cost me a little more , but I know exactly what is going on, and contribute to the local economy as well.
I have one short story that at least in my mind backs up my opinion of using a local service. I pay my bill 6 months at a time, and I forgot all about it, because at the time, my neighborhood had some identity theft issues, and my mail had actually been stolen.
Anyhow, I didn't send them in the normal 6 month payment for just over 3 months, and they never did shut my service off or even call and harass me. They casually sent me a bill, and even worked with me on the payment.
When I decided that I wasn't going to use the hosting services of a particular online service, they did not hesitate to cut it off at midnight of the final day........
but, I know people that have had no problem with virtual providers, so I guess it is all about what makes you comfortable, as well as having the right services.