Yahoo! Small Business has self-service templates (380 of em) that allow for a pseudo-customized site. What Ive argued to Yahoo! is that most businesses want simplification in terms of choices and only need customization at the margins. But they want true customization capabilities (i.e., logos, photos and some measure of control over formats and colors). Yahoo! has some of this but with its Flickr, mapping and other assets should be able to offer much more.
Now that were in the realm of drag and drop functionality online with AJAX somebody is going to come along with a very simple application to enable SMEs to create sites in an intuitive way using simply WYSIWYG text editing and drag and drop widgets or modules.
Yahoo! is in a position to be that company. They have the resources and a trusted brand. Having domain registration, site building and hosting is a perfect channel for search and other online marketing.