In principle, this looks like a great idea. It might actually make the so-called "famous 5-minute install" more of a reality. I would not be at all surprised to see others following suit.

But, as someone who would have considered this if I were not already very happy with my own host, I can say that one thing here would turn me right off. And that is, while what's being sold is hosted on Site5, UpThemes themselves are apparently using Pagely. I'd never trust a "solution" that the provider itself is not using.