Don't forget that "hosted in Germany" is a quality mark with which you can advertise. Especially International Customers don't like the idea of their data being stored in a country where the Patriot Act is a present reality.
I'm not sure how far "Vorsprung durch Technik"[1] would go as a competitive advantage with regards to your particular choosen hosting provider -- it will always just be hosting to your end users -- but I like the sentiment :)
Don't forget that "Hosted in Germany" is also a red flag for a lot of companies that they may be arbitrarily assessed massive fees to prop up other businesses[1]. As is the same with many EU countries[2][3]. You're taking a risk wherever your data is stored.
So, you can either have to implement good data protection so that your users don't have to worry about the FBI snooping in the U.S., or you can run the risk that some country in the EU decides to prop up some failing industry by extracting unreasonable tolls out of your company. Personally, I'd go with the former, but that's just my opinion.
It's not even about a choice, as companies from EU countries can't store store user identification data of EU citizens in US servers. So you are more or less legally forced to have (some) servers in EU.
