A mid sized desktop is equivalent to a full 4u server space. A 1U server can be problematically small from my experience dealing with them. The optimal space is closer to a 2U.
Optimal for which particular set of circumstances?
Google uses I believe in a 2U rack servers but I know for sure that they each come with a specially designed high efficiency UPS that achieves over 99.5% efficiency. Their transformers on site also get over 99.5% efficiency. Their cooling system is optimized for efficiency as well. They have gone to the extreme to maximize their server efficiency and reliability while minimizing their overall cost.
Google builds from the ground up the use their own custom housings.
HostGator simply buys off the shelf desktop units and passes the additional cost over optimal to their customers.
Here's a quick quiz, why don't you take another look and report back how many of those boxes are Inspirons desktops, and how many are PowerEdge Server grade towers?
Dave's photo clearly shows that space isn't an important consideration for them. They're a small fish and the best for them may be different than other companies. Their choice has served them well in their business model. At the end of the day, that is what matters.
Why does space have to be a consideration? It only comes to play when you are silly enough to build a data centre on prime CBD real estate. The rooms still need to be cleaned, equipment serviced and revised, climate needs to be maintained throughout the room. High density isn't always the best strategy.