Virtual Traffic Jam
Second Life generates 7GB-8GB of traffic per second, and is currently supported by 8,000 servers. "When people see the broader architecture, they'll understand that's... it's Web-like. It's scalable," said Linden Lab CEO Philip Rosedale at the Gartner Symposium/ITxpo 2007.
I did run a hosting sideshow at one time in my life (am still running a webserver with the full-monty somewhere) and discspace isn't the issue, hosting prices are basically determined by datatraffic nowadays. A regular European ISP will charge you about 1 euro per GB of datatraffic. So 8 euro's per second, 1,680 per minute, 100K per hour and 1.2 Million dollar per day.... I think they're getting quantum discount ;)
Right now, just at the end of the maintenance window, the Traffic Jam is actually happening. There's a new client version (1.5) that's been massively downloaded. The Second Life site is virtually dead right now.