ServerWatch has an interesting article that discusses several organizations and their stories of facing the scale out or scale up decision. The article discusses scalability headaches experienced by companies facing rapidly increasing capacity and processing power. All of this while becoming more and more dense.
I would submit that these stories and problems experienced are the ultimate sell for going with a colo provider instead of facing the changes alone. A company can attempt to run their infrastructure AND a facility, or leave the facility to someone whose sole purpose is to deal with cooling and power headaches.
Check out the Server Watch article here.