In July 2005, I ordered a "root server" at Hetzner.DE, to host mail, web, and DNS services for myself and a few friends. I still use the machine for that purpose two years later. This is a brief summary of my experience.
Hetzner provides the hardware, power, and connectivity. You get root and can run whatever you want on the machine. They maintain the hardware, and you have to maintain the software. A range of server configurations is available.
I signed up for the entry-level RP2999 plan, and got an Athlon XP 2000+ with 512MB RAM and a 160GB disk for €29/month, with a 200GB monthly transfer limit. That plan was discontinued in April 2007, and my server was automatically shifted to the DS2000 plan (same features, 1TB limit) for €39/month.
Update (2010-08-10): The current entry-level plan is the EQ4, for €49/month plus a setup fee of €149. Although that is no longer "very cheap", you get much more for the money: an Intel Core i7-920 CPU, 8GB of RAM, and 2*750GB disks in RAID-1. The data transfer limit is 5TB per month (if you exceed that amount, you can pay €6.90 per TB, or your connection is restricted to 10Mbit/s).
There is no way to upgrade from one plan to another, other than to order a new server and decommission the old one after migrating your data and services (during which you pay for both servers).
Update (2010-08-20): I ordered a new EQ4 server today. This is the story of my upgrade.
Hetzner also offers inexpensive shared web hosting, as well as colocation and managed servers. I have no experience with any of these.
The RP2999 server didn't have any, but newer servers offer features such as automatic reboots via a web interface (as opposed to requesting that your server be rebooted and waiting for someone to do it) and 100GB of free backup space on another server.
Update (2007-11-23): I discovered that the DS2000 plan I had been moved to (without any advance notice, I might add) was eligible for six free IP addresses (a /29 subnet). I applied for it, and received email a few minutes later with the relevant details. Easy as pie.
Update (2010-07-07): A friend told me that Hetzner was offering a free IPv6 /64 subnet to their customers, so I signed up for one, got the details by email, and was IPv6-enabled a few minutes later. No problem.
Update (2010-08-15): I just noticed that the new servers can get only four free IP addresses. Getting a /29, which used to be free, now costs €15 for setup plus €15/month for the "flexi-pack".
I had to fax my order, because their web form was not set up to accept my non-German postal code (at that time; the problem may be fixed now). They responded promptly, and my server was online within two days (not in the 24 hours they promised, but nothing to complain about).
My credit card is charged monthly, and I get a PDF invoice by email. Because I'm not in Europe, I don't have to pay VAT, so I'm charged a bit less than the prices on the web site (which all include 19% VAT).
I have not had much reason to contact Hetzner support. On the few (~5) occasions when I have sent them email, their response has been prompt, courteous, and helpful.
I don't speak German. Considering that Hetzner is a German company and targets the German market, they have been very accommodating. The web site and all their communications (email notifications, etc.) are in German, but they respond to my email in English.
It hasn't been a serious problem for me. I can make some sense of the German mail, and I have friends who can help me with the more difficult bits. You might find it painful if you don't know any German at all (but I know someone who managed to lease a server without any German, and is happy). The monthly invoices are all in German, which may or may not be a problem. The administrative interface is also in German.
I notice that they now have an English version of the dedicated server page. I guess that means they have some more non-German customers these days, and that things will become easier for English speakers.
Update (2007-10-08): For the first time, a message from Hetzner (about scheduled downtime; see below) included an English translation following the German text.
Update (2007-11-22): Traffic warnings and other notices are all sent with German text followed by an English translation now. It seems Hetzner has made an effort to translate most of their correspondence.
Update (2009-09-13): I just noticed that the web interface has been translated to English (and made nicer-looking to boot!).
While recovering from a disk failure (see below), I found two useful features of the "Hetzner robot" (the administrative web interface).
The first allows you to ask for the machine to be rebooted. Unless you pay for the "24 hour reboot service" (or your plan includes it, which the new ones all do), this is available only at certain times (0645-2245 on weekdays, 1000-1700 on Saturday, and not at all on Sunday), and is subject to unpredictable delays, because someone apparently does it manually. (It took about an hour both times I was needed to use it.)
The second allows you to activate a "rescue system", whereby the DHCP server instructs your machine to boot off the network (into a minimal Debian-based system) the next time it reboots. A random root password is generated, and you can ssh in to try to fix the problem. The next time you reboot, the machine will boot from the disk as usual. Very handy.
You can apparently even use this to reinstall one of the standard Linux images provided (32/64-bit versions of OpenSUSE, Debian, and Ubuntu in various configurations).
There's a Hetzner wiki with answers to FAQs, system configuration information, and so on. All in German.
In the two years since I ordered the server, there have been (as far as I can remember) three power failures that their UPS couldn't handle; and the machine was temporarily unreachable due to network problems a couple of times. In every case, the problem was resolved quickly. (I can't be more precise, because the outages were infrequent enough that I never bothered to measure.)
Update (2007-10-08): Hetzner provided ten days' notice for two and a half hours of downtime scheduled for maintenance work on their power infrastructure. I hope this improves the power situation in future.
Update (2009-09-13): Since the last noted scheduled downtime almost two years ago, I have noticed no outages (either network or power).
hetzner-status.de has information about any current problems (but no archive of past problems).
An aside: Hetzner blocks outgoing connections to port 6667 (IRC). That doesn't affect me much, but it's annoyed me and a number of others on occasion.
Update (2007-11-22): My server's hard disk failed this morning. I notified Hetzner, and received a response an hour later. They booted the machine from the network so that I could copy the data off it, and asked me to submit a support request through the web form to have the disk replaced. I did so, and the machine was back online with the new disk 4 hours later (although they initially estimated that it would take just half an hour).
I have been very happy with Hetzner, and I would recommend them to anyone who needs inexpensive and generally reliable hosting.
Abhijit Menon-Sen <ams@toroid.org>