This is only true if you assume that your machine magically repair themselves after they fail. In reality, it might take a day or a week or a month to repair depending on the type of failure. I've been in the position of having noticable degradation of service because our CPUs were failing faster than Sun could provide replacements, so dead machines were piling up.
Comment on Re^2: Perl cgi without mod_perl, your experience
If it takes a long time to repair after a failure, it's all the more reason to have more hardware. I know few companies who can afford an important service to be unavailable for weeks or months.