A web application is hypothetically featured on Digg or Reddit, and the server load immediately spikes up by a couple of orders of magnitude. What kind of hosting solution will allow the website to survive through a large flux like this? (and not cost a fortune)

Hosting through AWS seems to be in fashion these days. However, many complain about the cost. Will a VPS hosting solution also be able to scale-up in a timely fashion, while costing less? Alternatives? Thanks.