:) Hi wondering?
That is extremely unfortunate that you have been "ripped off" as you put it, however I think that this is a unique case, we have been in the web site service industry for over three years and have never heard of this type of thing happening.
Although we sympathize with you we find that in most cases if you go with a company that has been around for some time and has a good track record this will not happen, from your post :
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Why would they sell you "all that space" and only make $20 a month??????
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It appears that you may have been signing up with hosting providers that were highly overselling there product, this should have raised suspicion in there company from the start.
I do agree that most people that get into the hosting industry should eventually have their own servers as this is ultimately what they should be striving to achieve from the start, by doing this it increases their control over what they can offer their clients and ultimately increases their profit margin, however as with many start up companies their budgets may not allow them to do this straight away, so that is where purchasing a reasonable sized Reseller account from a respected Hosting provider at a reasonable price becomes a necessity and if you check for the warning signs like, $20 a month for 10gbs space and 60 gbs of transfer, only been in business for 3 months and are claiming to have been around a lot longer etc. you should be quite safe in your purchase.