Traditionally, Windows-based hosting costs more money than Linux hosting as a result of the licensing fees assessed by Microsoft (Linux is open source and therefore free to use). However, this is less true today. Some companies, like 1&1 and GoDaddy offer hosting packages that cost the about same, regardless of which operating system you choose to run.
Why should you upgrade to a VPS or Dedicated Server? This may have to do with the type of site you have. If you have a lot of photos and videos that are password protected, this may be against your host’s rules for shared accounts which often prohibit file storage. Or you have a lot of site visitors, the metaphorical guests in your apartment, and your account may start getting crowded as those guests start clogging up the “hallways” otherwise known as CPU capacity. Another reason is to have full control over the configuration of your server, if you own a house you can make modifications you may not be allowed to make in an apartment or townhome.
Almost all the services offer some sort of page builder that makes it easy to drag and drop to build your page. These are great for getting started, but they often lock you into the service. Most page builders are proprietary to the service, or don't create HTML that's portable enough to be easily moved to another service if you decide it's necessary.