Why did they take an entire rack, instead of a few servers? I can think of a couple of potential reasons. - VM's, which could potentially live on any physical server in a VM pool - Insufficient information on which physical servers belong to their suspects - They just don't trust the colo operators to not be involved, and thus limit the suspect data to the servers they provide.
While I wholly agree that it's unfortunate that Instapaper and Pinboard were affected, it's not an unexpected consequence of having your servers alongside (or on the same physical machines) of people you don't know.