Yes, servers and downtime are twins. And the tricky thing is that some lay people would think 99% uptime is good, not realizing that it actually means more than 7 hours per month.
I too haven't noticed much difference between 99.97% and 99.7% until very recently, as most people won't notice that couple of hours spreading across the month, unless yours is a really critical project (AND you have income being generated every minute).
For most webmasters, 99.9% is good enough (not *great* though), but anything worse than 99.7% is usually considered sub-standard. You just need to strike a balance between cost and performance that suits YOUR needs.