Hi alfakir,
This is most probably a scam or overselling of resource. Imagine if they use a 80GB HDD, they can store maximum 8 clients on one server. That makes 8 x $6.95 = $55.60.
Do you think businessmen will make loss in business? Certainly not. The possibility is, they are using a low end server, which is cheaper than $55.60/month. The second possibility is they are overselling the resources. Say, they accept 20 clients on one server. That makes $139/month (still less for a good server) But this makes one user can use 3+GB (you can't use the whole 80GB HDD)
Therefore, my advice is, if you pay peanuts, don't expect to get gold.
Thanks.