I have mine on a 512mb VPS.
Admittedly it has chewed up all the ram half the swap.
But it has been running fine.
It's on Ubuntu 12.04 if that helps.
I didn't do anything special when i set it up.
I had a look, at how much a VPS costs in the USA, and i was pretty shocked. In Germany you get a VPS with 2 Cores (4 GHZ), 2 GB RAM, 150 MB HD an a 100 MBIT Connection for 9.99 per month, what is approximately 13 $
I searched for a VPS in the United States, but for the same price I just found VPS with a maximum of 512 MB RAM