I would like to achieve something similar to what wordpress.com does - giving each user its own subdomain. user1.wordpress.com would in the VirtualHosts setup of Apache would have its DocRoot at /user/user1, for instance.

Now, our hosting service provider takes a fee for creating a domain, and in our case this would mean a ridiculous number of domains with a matching price. After some googling on DNS I came over a description of a DNAME record. That seems to fit the bill precisely. Any reason why my service provider would not do this, or why I should not do this?