Ok, and I've seen Java apps not do that. Argument by anecdote is bankrupt.
Only if your FTEs are very cheap. Most I know wouldn't get out of bed for less than $50k+.
But even if it was half a man-year upfront and one recurring - that's still a no-brainer (remember we're talking an entire rack here, which goes quite a way for most apps). If that rack enables your 5 programmers to work only 10% faster (completely theoretical ofcourse, but for the sake of the argument...) then it has already more than paid for itself.
Your argument is quite old nowadays (I remember the heated efficiency debates in the 90s) and has long been decided. Hardware is so cheap now that in most cases it really is demonstrably more cost effective to throw hardware at certain problems.