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I currently have 1 web app running on 2 dedicated servers (load balanced).

The web app serves dynamically generated ASP.NET pages (no db or photos).

Each server is dual quad core (8 cores total) with 8 GB of ram.

I have noticed that to get full use of resources of the machine and to get more threads and less contention, I need to make use of web gardens, so there are 8 instances of IIS worker process running on each server. (serving just 1 site)

Throwing more hardware at 1 server doesn't seems to help, I have 5 GB of unused ram, processor running at 70% and very low hard disk usage.

I need to add another server and with my hosting provider now offering cloud servers, I'm wondering if the could is the way to go?

For example:

I am thinking of replacing the 2 servers with 8 x 2core cloud instances to help distribute the load better and prevent me from having to run in web garden setup.

Is it better to have a small number of dedicated very powerful machines in a web garden setup

OR

many instances of less powerful 'shared' servers distributing the load in a cloud setup?

(I am specifically thinking about threads and contention)

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There is no right answer to your question - it all depends on the app. Most web apps these days are written for scale-out, but without more knowledge about yours, no idea. Do you know what the blocking factor to your per-process scalability is? Also, using less memory is a good thing - if you're hitting 70-80% CPU with lots of memory headroom, you're overspecced. –  TristanK Aug 24 '12 at 9:37
    
We don't have performance issues at present, I am just trying to ascertain if moving forward we should migrate to lots of cheap cloud servers instead of adding powerful dedicated servers. I guess the question is too subjective. –  user133123 Aug 24 '12 at 12:37
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