Software As A Service Network Setup

I was thinking of doing the following:

-- OPTION 1 --

Each server has everything it needs to provide the clients on that particular server. Meaning each server has cpanel, apache, php, mysql, smtp, pop, bind, etc.

So as the number of clients increases simply drop in new servers with each having everything on them.

-- END OPTION --

-- OPTION 2 --

The other option is to go with a centralized database, where each server has everything except mysql and I have one dedicated very high power box with ALL clients hitting the one MySQL server.

-- END OPTION --

Each option has its advantages/disadvantages.

Option 1 allows for very large scalability, simply drop in new servers. Option 2 will eventually run out of power and require a cluster to handle the mysql traffic.

Option 1 allows for fault tolerance and issues to only effect customers on that single server versus effecting all clients with a centralized server.

Option 1 however has major issues with rolling out new database schema and changes. It becomes a NIGHTMARE to make the changes to say 5, 10, 50 servers versus making the change on 1 centralized mysql server.