Again, it's worse than "not awesome", it's unprofessional and unethical.
If you commit to provide a service, whether you're charging $1 or $100k per month, there are some minimum standards of behavior you should hold yourself to. This isn't "you get what you pay for" because the host went down. Maliciously deleting backups that you're supposedly responsible for, over a twitter slapfight, is unethical. No matter what.
Do you know that he was actually responsible for backing up this data? This hosting plan costs less than some places charge just for maintaining backups.
They did have the backups - and said so - and then deleted them just to be assholes. So it's moot whether they were responsible for backing up the data; the issue is they deleted it on purpose just to hurt.
They had already terminated their service agreement with this person. If I were a low-margin hosting reseller, I wouldn't bother to keep around the data of ex-customers either.
Except that they did keep the data of the ex-customer that didn't curse at them, and have now reinstated his account.
$3/month host here, is that something you should rely on for backups
Forget about how much you think it costs to host your backups. Think about how much you backups mean to you. What would happen if you didn't have access to your backups?
I wouldn't rely on a $3/month web host for my one and only copy, that's my point.
But you probably wouldn't use $3 hosting to begin with. The kind of customers who are attracted to this are exactly the kind of people who don't have backups and expect great service for $3. (Because, after all, $3 is a million times more expensive than Google, and Google is pretty reliable...)
No, you definitely shouldn't rely on a $3/month host for backups. However, that does not in any way mean that the $3/month host should not also keep reliable backups. Just because one party can't count on it doesn't mean the other party isn't responsible for it.
Having said that, if you choose to run a low cost hosting service, you should know that your customers are going to be greedy entitled bitches, and you should deal with that fact in a professional matter. Otherwise, just get into some other line of business.