Content delivery, image hosting, and all that

[zomega42]

Markus' post got me thinking about hosting a very large number of small images. I didn't even know such a thing as "content delivery" (CDNs) or caching services existed until last week-- I have about 50K small images, doing about 500 GB a month in image traffic. I'm adding some short videos that will probably be another 500 GB/month soon. I have no idea if this is big enough to merit using a CDN or caching service, or if they would laugh at me if I give them a call.

A cheaper alternative for a small/medium site would be to get another dedicated or colo server where bandwidth is only pennies per gigabyte, but I'm not too keen on having another server to worry about, backup, maintain, etc., and I don't mind paying for a CDN if that's a more robust and scalable solution.

Does anybody with a medium-sized site have any experience with CDNs or caching services? What are the pros and cons? (And for that matter, what exactly is a CDN?)