Many people do. S3 is convenient though. It handles durability, replication, uptime, etc... and even with the insane markup on bandwidth many startups / companies can afford a $10k/mo bandwidth bill because it's cheaper than hiring some devops and a team to build out the appropriate infrastructure.

That's what I meant with "really cheaper". Sure, bandwidth costs are lower with Hetzner, but that's not everything.

It depends on how you define AWS-like services. Lots of VPS providers cater to bandwidth-intensive applications and are hosted on cheap dedicated servers.