You call it overselling at ANY point. Sorry, but providers who oversell disk space, RAM, etc., are garbage, IMO. Clients should have the ability to use the entire product they are sold at any time, without having to wait for server upgrades, etc. Clients aren't paying for oversold crap.
When I buy a 16GB dedicated server with a 1TB hard drive and 5TB of bandwidth, I don't expect to get a 4GB server with a 250GB hard drive and 1TB of bandwidth in return, and be told by the dedicated company that they'll just upgrade my box if I ever come close to using their limits.
Companies who oversell are no better than the "unlimited" providers. It's all one and the same. If you're going to oversell your hard drive, why even bother calling it 160GB of space? Why not just call it 10TB of space, or unlimited space?
When I buy a 16GB dedicated server with a 1TB hard drive and 5TB of bandwidth, I don't expect to get a 4GB server with a 250GB hard drive and 1TB of bandwidth in return, and be told by the dedicated company that they'll just upgrade my box if I ever come close to using their limits.
Companies who oversell are no better than the "unlimited" providers. It's all one and the same. If you're going to oversell your hard drive, why even bother calling it 160GB of space? Why not just call it 10TB of space, or unlimited space?