I'm fairly new to the marketing aspects of web hosting. I also tend to be very technically minded. For example, if I an selling 1000MB plans and I have 30GB on the server I figure on selling 30 accounts. However, I'm realising that factual numbers aren't always realistic. I'm also realising that many hosts actually oversell because not everyone is going to use all that space.

Originally I offered 1000MB plans as my smallest plans, however it seems that a lot of people want bigger numbers. So in order to make my hosting accounts marketable I increased those same plans to 10000MB or 10GB so they are more appealing. But I realize that a lot of people don't even know what those numbers mean and may purchase the product simple because it's competitive with other sites.

Does this marketing approach seem feezible to anyone?

Everything depend on what kind of customers you are looking for. Also if you do overselling, be sure to be able to switch accounts on another servers if the first one is full.
Oversell is not a good idea in webhosting. A stable customer is looking for the quality of your service and not for space and monthly bandwidth.

The strategy may work for sometime. However, with the increase in usage by the customers the site tends to become slower to access and that is the place where people get annoyed with the hosting provider. Hence, multiplexing can be done only to some extend which may not affect the reliability of the hosting provider.

Big plans attract customers but it depends upon you that which type you will be targeting. Like if you trying to sell you product especially to email users, you need to give them large space, however web users do not need such big space.

This has been my observation with hosting also because most people don't use over 100MB. So I actually reduced the amount of space as well as the cost and am trying this approach. What I've noticed lately is providers offering free hosting for a year with the purchase of a domain name. It seems that the market is so saturated with hosting providers that there isn't a good flow of new business for everyone.