My concern is that on shared hosting I am limited on what I can break...whereas on VPS, I could quite possibly accidentally take down our production sites which would not be good!

With great power comes great responsibility! ;-)

At $WORK we provide a sort of half-way house option which is a managed VM. We give the customer as much control as they are happy to have via ACLs and sudo (where required). This lets them do some configuration but without access to critical systems like /etc/fstab for example. We take care of the low-level O/S management and leave them to the bits that they want to monkey with which is usually at the application level. Since it's a VM they don't have the restrictions we have to impose on the shared hosting customers such as CPU and database limits because it's only their own systems which they'll be hogging. It's not to everyone's taste but those customers who do use it seem to really like it.