What you have to realize is that for a site as large as Michael's, a VPS won't do. Plausibly, one dedicated server might not even do, unless it's a quad-CPU second-gen Nehalem Xeon system with 128GB of RAM and an iSCSI attached SAS 10krpm disk array.... Yeah, that hardware is freaking expensive no matter where you rent it from (or buy it, or whatever). So people usually end up buying a cluster of servers instead. Fairly high-end servers. Like, 24GB of RAM, one or two Nehalem-ish Xeons, and either capacious or fast HDDs depending on their storage needs. Those type of servers cost about $250 a pop, even in Germany. In the US, you don't even wanna know.
Michael's site is not juts about FOSS news. It's about that and benchmarking. Benchmarking costs money, because a large percentage of the hardware he uses, he has to buy. If he's lucky he occasionally gets a CPU from Intel or a GPU from AMD. But he has to buy system chassis, power supplies, motherboards, RAM, disks, keyboards mice and monitors, and all that other jazz. These are business expenses for him, on top of his server expenses and travel.
If you discard even all the stuff he spends money on "for fun" (e.g. lederhosens and German beer), he's still got quite a burn rate as far as operational expenses. Hardware for benchmarking, large-scale dedicated hosting (much larger than you're aware is even possible if you are thinking in terms of VPSes), and travel to important FOSS events. It's a lot of money, I'm sure.
You can't just take one part of Michael and just pay for that. If he can't fund his entire business, the whole thing will sink. You could wish all day long that he only do one particular thing and stop benchmarking or stop traveling, but that's not how his business is run, so it's too bad for you.
He has to pay for his business somehow, and while I don't think ads are the best way, I think there's a way to attain a happy medium by having ads that aren't irritating, and are as relevant as possible to the people viewing them. Maybe static banner ads (no animated GIFs, no flash) along the top and bottom that advertise Linux vendor things? Maybe Red Hat and Novell could pay for ads advertising their enterprise offerings. Oracle too.
A donation model of business will never work if that's your only source of income, especially not for a for-profit company. People talk a lot about donating on the internet, but in reality, people donate a lot less money (and a lot less often) than they say they will. Trust me, I run a site that gets donations, and I can't tell you how many times I've gone and spent a lot of time to do something to make someone happy, then let them see it, because they said they'd donate if I did it... well, I did it, and they didn't donate. Instead they just complained about the next thing that came to their mind, as if to string me along from one issue to the next like a fool, hoping they'll drop a pittance in my lap.