It is true that the Rackspace Cloud Sites environment as of this writing is not production ready for Magento. Worse than the slow performance and occasional timeouts that your customers see in the storefront, is the inability to do basic tasks in the administrative interface without constant timeouts. We have personal experience with this.
The Rackspace Cloud Sites hosting offering is not part of our list at MagentoHost.info because it is not a usable solution yet. However, here is a store in our index of Magento stores that is currently running in the Rackspace Cloud Sites environment:
Rackspace is a Magento Enterprise Partner though, so it is possible the Rackspace Cloud Sites environment may improve in the future.
“Cloud Sites” and “Cloud Servers” are two different offerings by Rackspace (go to their site for more details). Rackspace Cloud Servers are an excellent production grade solution for Magento. The idea that Magento wont run in the “cloud” just isn’t true. You must be careful generalizing with the term “cloud” since its implications are so broad.