An incubator is a facility established to nurture young firms during their early months or years. I, hand-on management training, marketing support and, often, access to some form of financing.
I believe in virtual incubators which try to replicate the ecosystem in the Silicon Valley. Financing is an important aspect but it is important to create an environment which helps the incubatees to sell their idea. Often entrepreneurs talk of the cafe where they met an angel investor. I believe careful use of social media can provide an answer for this. I believe less in management training because i think it is not a priority for small start-ups. It is probably needed as the start-ups grow up. What is completely useless these days are incubators which are mere offices with secretaries and internet connection.
A business incubator is defined as a facility that provides affordable rent to new and small firms, shared office and logistical services, and arranges business management and financial assistance.” (Allen , 1988)
Incubators are necessary for establishing a solid base with greater confidence to the start-ups to develop their technology/idea. Of course these start-ups should try their best to come out from these incubators asap!
Business incubator is a support based facility that nurtures the early-stage businesses until when they can survive on their own. It does this by offering its tenants or incubatees such amenities as infrastructure, business support and access to network of contacts.
I've just discovered your (old) question and think that, perhaps, the following paper will be helpful to you if you want to work on business incubators: