I am willing to host multiple web sites (wordpress / drupal) in the cloud. I am doing it mainly because of automatic scalability. I do not want to engage myself on server administration sort of work and totally focus on development. Should I go for PaaS, IaaS or SaaS.
Given that which service provider will be better to serve my purpose.
The services I am looking forward to are Azure, dreamhost, elastichosts etc.
I am looking forward to some other suggestions as well.
I would suggest that you look at WPEngine and Pantheon. I've used both and they are reliable platforms. WPEngine only hosts Wordpress sites. Pantheon hosts both Drupal and Wordpress installs.
Both have automatic updates, nightly backups, amazing support, great up-times, and have git integrations (you push a commit, and the site updates). Pantheon has a video series that explains their service while WPEngine has an extensive knowledge base. If you would like more options, you can look at the wordpress.org page for managed hosting and the drupal.org page for managed hosting.
Pantheon is my preference of the two since you also get shell access and you can use command line tools such as Drush and WP-CLI. I also like their backend interface more and the ability to have multiple development environments.