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I keep reading people saying "unlimited bandwidth hosting is a scam and you should run from hosting companies that offer unlimted bandwidth."
While I know nothing is truly unlimited but is there a real reason to not use a host that offers unlimited bandwidth other than the "gimmick" that most people see it as?
As you mention, "unlimited" bandwidth isn't really unlimited. The ISP can't afford infinite bandwidth with a finite customer base and is counting on the fact that almost all sites do very little in the way of traffic to maintain the illusion of infinite resources.
An unlimited plan is really meant to handle a brief and infrequent traffic spike (e.g. your blog post goes viral for 24-48 hours) but sustained high-bandwidth consumption will eventually get you into trouble. If you read the service contract carefully, there will be all sorts of clauses that the hosting company can invoke to limit your account's use of bandwidth. Common clauses include bans on hosting file exchanges, torrents, streaming video repositories, distributing other people's IP, etc. People sign up for these plans, don't read the fine print, and assume they can become the next Pirate Bay or YouTube and then scream "SCAM" when the ISP shuts them down.
If you have a small, low-to-medium traffic site then it is unlikely you will ever run into issues with an unlimited bandwidth plan. If you are planning on a site with growth potential, make sure you read the terms of service carefully and do your research into viable alternatives for high-traffic hosting.
