Chris Winfield writes an interesting post about why you need good hosting over at Search Engine Land about how robust hosting helps you in the event of a social media traffic surge. This is of course very valuable but the importance of good hosting extends much further than simply keeping your site running under a traffic surge.
When a website suffers hosting issues during a Google crawl it can have drastic effects on traffic for weeks afterwards. The problem is particularly striking for very large sites that attract a lot of long tail traffic as site owners often find it hard to figure out why their traffic has dropped.
Imagine Google spiders your 100,000 page site and one day finds 10,000 pages are not working. Those pages will drop from the index until Google crawls them successfully again. If the dropped pages had good rankings each might send 1 visitor per day – suddenly you have lose 10,000 unique visitors per day from your site even though your main keywords are still ranking highly.
The only way to find out when this happens is to use an uptime monitor to see when your hosting goes down, that way you will at least be prepared to lose traffic from Google for a while. Webmaster Central should show crawl errors as well so make sure you check there first if you start to lose traffic from Google.