ISP shared server configuration -- are they nuts?

Help! I don't know if I'm being fed a line by my ISP or not.
I am in the process of moving my organization's Web site to a shared Solaris server hosted by one of the big ISPs.
When I was given the IP address and FTP'd to the site to start transferring files, I found I could navigate all the way up to the root of the Solaris server. All of the standard Unix directories seem to be visible, such as dev, usr, bin, etc. Although my user rights appear to be limited -- I can't copy a file into usr/games for example -- I can clearly see the folder names for the other clients sharing the server (although I could not see their individual files) and can FTP back some of the operating system software, including a quota file. Some of the folder names are pretty obviously the names of the other companies sharing the site.
This is not how my previous hosting service handled things. They mapped the customer account to the root of the customer's home directory and I could not see anything of the host server, other customer folders, or the operating system. Nor could I see other client's home directories.
I've been told by the hosting company that these rights are granted because "a customer not 'living' in a chroot'ed environment can overflow a buffer in a command that has additional privileges and gain root access, thereby granting themselves greater access than they should have."
Isn't there a better solution to this problem that doesn't end up inadvertently disclosing the identity of the other businesses sharing the host server? Or am I just being neurotic and this is standard ISP practice for shared boxes?
Thanks!

Thanks a lot and i know the reason now but i removed the conn=2 form the dispatchers parameter value but immediately after this i got error message
ORA-12518: TNS:listener could not hand off client connection
and users were not able to connect with the database so i changed value back. Why did i receive this error message? any idea
Thanks
Salman

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