Thanks all. Nick
Before you know it, you're drenched in trouble, trying to get some hack-cheap-registrar to unlock domains or whatever, while the client is desperate because his e-mail doesn't work, or figuring out why the website broke, only to find out the boss's nephew tried to install a BT tracker on the site, and by the way, no, he doesn't have a backup, didn't you take care of that?
Get a small VPS at SliceHost and host the sites yourself. Forward their e-mail to GMail accounts, or setup apps for your domain. Charge $20 a month, paid a year in advance. One billing round a year, if it takes you more than half a morning, you're doing it wrong.
The only point of contact the client has is you, the only bill he gets is from you, and you're pretty soon pocketing a few $100 a month simply by not screwing up the server.
I would advise getting a small VPS from Slicehost. Set it up so that it automatically backs up (they charge like $5/month to do machine replication, but having an always-ready-to-go daily backup of your client's machine should be a closer).
If you're going to go for old-school hobbyist shared-hosting, I'd suggest Myhosting.com or http://www.nobullshithosting.com/
I'd also advise you to stay away from Dreamhost.com. Their servers have terrible bandwidth, lose emails, and their TOS is ridiculously restrictive to the point where they can justify closing your account for any reason -- the primary one being that you're actually costing them more they're paying (e.g. using more than half the "promised" 500GBs of space their $9.99/month account gives you).
If you're looking for something 'beefier' - I'm currently with WebFaction.com - awesome guys, great if you need some cheap hosting for your Django/Rails apps (and don't want to pay for a VPS)
If they are truly low traffic, just host them yourself on a business class connection. You can pack a lot of low traffic websites on one machine. Graphics will load slowly unless you pay for more bandwidth, and you have to do your own backups, of course. Have your customers buy the domain themselves, but then have them log into godaddy or whoever they used and do the setup yourself.
Should the business relationship end, they control the domain and can just point it somewhere else, and you can mail their backup to them on a CD, and thus not be accused of holding anything hostage.
