Sorry Allen - I'm anti Cloud myself but you are probably correct in that for a small office and small budget aside from the junk a host provider like GoDaddy will give you there probably isn't much else better.

Cloud transfers the cost and responsibility outside your organization it doesn't do away with either. Cloud is always a target, in house you can be a target but less likely unless maybe you're a billion dollar corporation with a big name. You do not have anywhere near the control on Office365 as you do with an Exchange Server sitting in your server room that you have 100% full control over. For smaller companies again probably is the best option as running everything in house just may not be financially possible for them.

@Robdutoit
I'm no longer in the market for another mail product as our own company was recently merged into a larger multi billion dollar organization and they have Enterprise everything with Microsoft so not my financial issue anymore. Hopefully once the dust has settled I still have job - you know how mergers go sometimes they bring in their own people to do your job and push you out the door.