When I was starting out, I would do website programming for people in town that I knew, and when the site was complete I'd just offer to host them as well. I think this approach works wonderfully, especially when trying to gain those base clients that just allow you to break even.

Plus, when someone comes to you to code a website, they really just want it to work properly with minimal effort on their part. If you turn them away to another host, they have to upload, tweak, check logs, etc. I got away with charging a higher than normal montly rate because I took care of all that for them, and that's what they wanted.

Might not work for everyone, but it seemed like a good idea when I was doing it.